Correlation Between Paycor HCM and Freshworks

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Can any of the company-specific risk be diversified away by investing in both Paycor HCM and Freshworks 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 Paycor HCM and Freshworks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paycor HCM and Freshworks, you can compare the effects of market volatilities on Paycor HCM and Freshworks 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 Paycor HCM with a short position of Freshworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paycor HCM and Freshworks.

Diversification Opportunities for Paycor HCM and Freshworks

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Paycor and Freshworks is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Paycor HCM and Freshworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freshworks and Paycor HCM 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 Paycor HCM are associated (or correlated) with Freshworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freshworks has no effect on the direction of Paycor HCM i.e., Paycor HCM and Freshworks go up and down completely randomly.

Pair Corralation between Paycor HCM and Freshworks

Given the investment horizon of 90 days Paycor HCM is expected to generate 1.72 times less return on investment than Freshworks. But when comparing it to its historical volatility, Paycor HCM is 3.24 times less risky than Freshworks. It trades about 0.51 of its potential returns per unit of risk. Freshworks is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,169  in Freshworks on August 28, 2024 and sell it today you would earn a total of  476.00  from holding Freshworks or generate 40.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Paycor HCM  vs.  Freshworks

 Performance 
       Timeline  
Paycor HCM 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Paycor HCM are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Paycor HCM reported solid returns over the last few months and may actually be approaching a breakup point.
Freshworks 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Freshworks are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Freshworks demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Paycor HCM and Freshworks Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Paycor HCM and Freshworks

The main advantage of trading using opposite Paycor HCM and Freshworks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paycor HCM position performs unexpectedly, Freshworks 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 Freshworks will offset losses from the drop in Freshworks' long position.
The idea behind Paycor HCM and Freshworks 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.
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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