Correlation Between Palomar Holdings and Asure Software

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Can any of the company-specific risk be diversified away by investing in both Palomar Holdings and Asure Software at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Palomar Holdings and Asure Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palomar Holdings and Asure Software, you can compare the effects of market volatilities on Palomar Holdings and Asure Software and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Palomar Holdings with a short position of Asure Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palomar Holdings and Asure Software.

Diversification Opportunities for Palomar Holdings and Asure Software

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between Palomar and Asure is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and Asure Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asure Software and Palomar Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Palomar Holdings are associated (or correlated) with Asure Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asure Software has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and Asure Software go up and down completely randomly.

Pair Corralation between Palomar Holdings and Asure Software

Given the investment horizon of 90 days Palomar Holdings is expected to generate 0.73 times more return on investment than Asure Software. However, Palomar Holdings is 1.37 times less risky than Asure Software. It trades about 0.07 of its potential returns per unit of risk. Asure Software is currently generating about 0.03 per unit of risk. If you would invest  5,276  in Palomar Holdings on August 28, 2024 and sell it today you would earn a total of  5,627  from holding Palomar Holdings or generate 106.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Palomar Holdings  vs.  Asure Software

 Performance 
       Timeline  
Palomar Holdings 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating primary indicators, Palomar Holdings reported solid returns over the last few months and may actually be approaching a breakup point.
Asure Software 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Asure Software are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Asure Software reported solid returns over the last few months and may actually be approaching a breakup point.

Palomar Holdings and Asure Software Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Palomar Holdings and Asure Software

The main advantage of trading using opposite Palomar Holdings and Asure Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, Asure Software can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Asure Software will offset losses from the drop in Asure Software's long position.
The idea behind Palomar Holdings and Asure Software pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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