Correlation Between PDF Solutions and PROS Holdings

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

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

Diversification Opportunities for PDF Solutions and PROS Holdings

-0.44

Correlation Coefficient

PDF Solutions  PROS Holdings

Very good diversification

The 3 months correlation between PDF and PROS is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding PDF Solutions and PROS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROS Holdings and PDF Solutions 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 PDF Solutions are associated (or correlated) with PROS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROS Holdings has no effect on the direction of PDF Solutions i.e., PDF Solutions and PROS Holdings go up and down completely randomly.

Pair Corralation between PDF Solutions and PROS Holdings

Given the investment horizon of 90 days PDF Solutions is expected to generate 0.76 times more return on investment than PROS Holdings. However, PDF Solutions is 1.32 times less risky than PROS Holdings. It trades about 0.18 of its potential returns per unit of risk. PROS Holdings is currently generating about -0.03 per unit of risk. If you would invest  1,848  in PDF Solutions on April 28, 2025 and sell it today you would earn a total of  531.00  from holding PDF Solutions or generate 28.73% return on investment over 90 days.

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

PDF Solutions  vs.  PROS Holdings

PDF Solutions

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PDF Solutions are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, PDF Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

PROS Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PROS Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, PROS Holdings is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PDF Solutions and PROS Holdings

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

The idea behind PDF Solutions and PROS Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.