Correlation Between 8x8 Common and American Software

Can any of the company-specific risk be diversified away by investing in both 8x8 Common and American 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 8x8 Common and American Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 8x8 Common Stock and American Software, you can compare the effects of market volatilities on 8x8 Common and American 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 8x8 Common with a short position of American Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of 8x8 Common and American Software.

Diversification Opportunities for 8x8 Common and American Software

0.36

Correlation Coefficient

8x8 Common  American Software

Weak diversification

The 3 months correlation between 8x8 and American is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding 8x8 Common Stock and American Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Software and 8x8 Common 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 8x8 Common Stock are associated (or correlated) with American Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Software has no effect on the direction of 8x8 Common i.e., 8x8 Common and American Software go up and down completely randomly.

Pair Corralation between 8x8 Common and American Software

Given the investment horizon of 90 days 8x8 Common Stock is expected to generate 2.78 times more return on investment than American Software. However, 8x8 Common is 2.78 times more volatile than American Software. It trades about -0.02 of its potential returns per unit of risk. American Software is currently generating about -0.09 per unit of risk. If you would invest  285.00  in 8x8 Common Stock on March 7, 2024 and sell it today you would lose (32.00) from holding 8x8 Common Stock or give up 11.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

8x8 Common Stock  vs.  American Software

8x8 Common Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 8x8 Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, 8x8 Common is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

American Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with 8x8 Common and American Software

The main advantage of trading using opposite 8x8 Common and American Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 8x8 Common position performs unexpectedly, American 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 American Software will offset losses from the drop in American Software's long position.

The idea behind 8x8 Common Stock and American 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.