Correlation Between PSI Software and Equitable Holdings

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

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

Diversification Opportunities for PSI Software and Equitable Holdings

0.41

Correlation Coefficient

PSI Software  Equitable Holdings

Very weak diversification

The 3 months correlation between PSI and Equitable is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding PSI Software AG and Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Holdings and PSI Software 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 PSI Software AG are associated (or correlated) with Equitable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Holdings has no effect on the direction of PSI Software i.e., PSI Software and Equitable Holdings go up and down completely randomly.

Pair Corralation between PSI Software and Equitable Holdings

Assuming the 90 days trading horizon PSI Software AG is expected to generate 1.22 times more return on investment than Equitable Holdings. However, PSI Software is 1.22 times more volatile than Equitable Holdings. It trades about 0.09 of its potential returns per unit of risk. Equitable Holdings is currently generating about 0.02 per unit of risk. If you would invest  2,730  in PSI Software AG on April 25, 2025 and sell it today you would earn a total of  310.00  from holding PSI Software AG or generate 11.36% return on investment over 90 days.

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

PSI Software AG  vs.  Equitable Holdings

PSI Software AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PSI Software AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, PSI Software may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Equitable Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Equitable Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Equitable Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PSI Software and Equitable Holdings

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

The idea behind PSI Software AG and Equitable 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.