Correlation Between Performant Financial and Ricebran Tech

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

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

Diversification Opportunities for Performant Financial and Ricebran Tech

0.34

Correlation Coefficient

Performant Financial  Ricebran Tech

Weak diversification

The 3 months correlation between Performant and Ricebran is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Performant Financial and Ricebran Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricebran Tech and Performant Financial 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 Performant Financial are associated (or correlated) with Ricebran Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ricebran Tech has no effect on the direction of Performant Financial i.e., Performant Financial and Ricebran Tech go up and down completely randomly.

Pair Corralation between Performant Financial and Ricebran Tech

Given the investment horizon of 90 days Performant Financial is expected to generate 0.1 times more return on investment than Ricebran Tech. However, Performant Financial is 10.09 times less risky than Ricebran Tech. It trades about 0.05 of its potential returns per unit of risk. Ricebran Tech is currently generating about -0.55 per unit of risk. If you would invest  237.00  in Performant Financial on February 2, 2024 and sell it today you would earn a total of  39.00  from holding Performant Financial or generate 16.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.07%
Values	Daily Returns

Performant Financial  vs.  Ricebran Tech

Performant Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ricebran Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ricebran Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Ricebran Tech is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Performant Financial and Ricebran Tech

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

The idea behind Performant Financial and Ricebran Tech 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.