Correlation Between Perficient and Formula Systems
Can any of the company-specific risk be diversified away by investing in both Perficient and Formula Systems 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 Perficient and Formula Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perficient and Formula Systems 1985, you can compare the effects of market volatilities on Perficient and Formula Systems 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 Perficient with a short position of Formula Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perficient and Formula Systems.
Diversification Opportunities for Perficient and Formula Systems
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Perficient and Formula is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Perficient and Formula Systems 1985 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formula Systems 1985 and Perficient 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 Perficient are associated (or correlated) with Formula Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formula Systems 1985 has no effect on the direction of Perficient i.e., Perficient and Formula Systems go up and down completely randomly.
Pair Corralation between Perficient and Formula Systems
Given the investment horizon of 90 days Perficient is expected to generate 1.15 times less return on investment than Formula Systems. In addition to that, Perficient is 1.26 times more volatile than Formula Systems 1985. It trades about 0.02 of its total potential returns per unit of risk. Formula Systems 1985 is currently generating about 0.03 per unit of volatility. If you would invest 7,288 in Formula Systems 1985 on August 29, 2024 and sell it today you would earn a total of 1,439 from holding Formula Systems 1985 or generate 19.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.12% |
| Values | Daily Returns |
Perficient vs. Formula Systems 1985
Performance |
| Timeline |
| Perficient |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Formula Systems 1985 |
Perficient and Formula Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perficient and Formula Systems
The main advantage of trading using opposite Perficient and Formula Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perficient position performs unexpectedly, Formula Systems 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 Formula Systems will offset losses from the drop in Formula Systems' long position.| Perficient vs. WNS Holdings | Perficient vs. Genpact Limited | Perficient vs. ASGN Inc | Perficient vs. CACI International |
| Formula Systems vs. CSP Inc | Formula Systems vs. Nayax | Formula Systems vs. Information Services Group | Formula Systems vs. The Hackett Group |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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