Correlation Between Perion Network and Groupon

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

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

Diversification Opportunities for Perion Network and Groupon

0.73

Correlation Coefficient

Perion Network  Groupon

Poor diversification

The 3 months correlation between Perion and Groupon is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Perion Network and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon and Perion Network 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 Perion Network are associated (or correlated) with Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of Perion Network i.e., Perion Network and Groupon go up and down completely randomly.

Pair Corralation between Perion Network and Groupon

Given the investment horizon of 90 days Perion Network is expected to generate 0.65 times more return on investment than Groupon. However, Perion Network is 1.55 times less risky than Groupon. It trades about 0.06 of its potential returns per unit of risk. Groupon is currently generating about 0.03 per unit of risk. If you would invest  1,250  in Perion Network on February 7, 2024 and sell it today you would earn a total of  36.00  from holding Perion Network or generate 2.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Perion Network  vs.  Groupon

Perion Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perion Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Groupon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Groupon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Perion Network and Groupon

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

The idea behind Perion Network and Groupon 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.