Correlation Between PROS Holdings and EPlus
Can any of the company-specific risk be diversified away by investing in both PROS Holdings and EPlus 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 PROS Holdings and EPlus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PROS Holdings and ePlus inc, you can compare the effects of market volatilities on PROS Holdings and EPlus 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 PROS Holdings with a short position of EPlus. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROS Holdings and EPlus.
Diversification Opportunities for PROS Holdings and EPlus
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PROS and EPlus is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding PROS Holdings and ePlus inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ePlus inc and PROS 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 PROS Holdings are associated (or correlated) with EPlus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ePlus inc has no effect on the direction of PROS Holdings i.e., PROS Holdings and EPlus go up and down completely randomly.
Pair Corralation between PROS Holdings and EPlus
Considering the 90-day investment horizon PROS Holdings is expected to generate 0.78 times more return on investment than EPlus. However, PROS Holdings is 1.28 times less risky than EPlus. It trades about 0.33 of its potential returns per unit of risk. ePlus inc is currently generating about -0.14 per unit of risk. If you would invest 1,907 in PROS Holdings on August 28, 2024 and sell it today you would earn a total of 498.00 from holding PROS Holdings or generate 26.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PROS Holdings vs. ePlus inc
Performance |
| Timeline |
| PROS Holdings |
| ePlus inc |
PROS Holdings and EPlus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PROS Holdings and EPlus
The main advantage of trading using opposite PROS Holdings and EPlus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROS Holdings position performs unexpectedly, EPlus 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 EPlus will offset losses from the drop in EPlus' long position.The idea behind PROS Holdings and ePlus inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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