Correlation Between DecisionPoint Systems and Paylocity Holdng

Can any of the company-specific risk be diversified away by investing in both DecisionPoint Systems and Paylocity Holdng 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 DecisionPoint Systems and Paylocity Holdng into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DecisionPoint Systems and Paylocity Holdng, you can compare the effects of market volatilities on DecisionPoint Systems and Paylocity Holdng 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 DecisionPoint Systems with a short position of Paylocity Holdng. Check out your portfolio center. Please also check ongoing floating volatility patterns of DecisionPoint Systems and Paylocity Holdng.

Diversification Opportunities for DecisionPoint Systems and Paylocity Holdng

0.77

Correlation Coefficient

DecisionPoint Systems  Paylocity Holdng

Poor diversification

The 3 months correlation between DecisionPoint and Paylocity is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding DecisionPoint Systems and Paylocity Holdng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paylocity Holdng and DecisionPoint Systems 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 DecisionPoint Systems are associated (or correlated) with Paylocity Holdng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paylocity Holdng has no effect on the direction of DecisionPoint Systems i.e., DecisionPoint Systems and Paylocity Holdng go up and down completely randomly.

Pair Corralation between DecisionPoint Systems and Paylocity Holdng

Given the investment horizon of 90 days DecisionPoint Systems is expected to generate 1.45 times more return on investment than Paylocity Holdng. However, DecisionPoint Systems is 1.45 times more volatile than Paylocity Holdng. It trades about 0.09 of its potential returns per unit of risk. Paylocity Holdng is currently generating about -0.04 per unit of risk. If you would invest  570.00  in DecisionPoint Systems on June 9, 2024 and sell it today you would earn a total of  453.00  from holding DecisionPoint Systems or generate 79.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	84.48%
Values	Daily Returns

DecisionPoint Systems  vs.  Paylocity Holdng

DecisionPoint Systems

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days DecisionPoint Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, DecisionPoint Systems is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Paylocity Holdng

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paylocity Holdng are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Paylocity Holdng may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with DecisionPoint Systems and Paylocity Holdng

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

The idea behind DecisionPoint Systems and Paylocity Holdng 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.