Correlation Between PARAGON GROUP and ADRIATIC METALS

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

By analyzing existing cross correlation between PARAGON GROUP and ADRIATIC METALS LS 013355, you can compare the effects of market volatilities on PARAGON GROUP and ADRIATIC METALS 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 PARAGON GROUP with a short position of ADRIATIC METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARAGON GROUP and ADRIATIC METALS.

Diversification Opportunities for PARAGON GROUP and ADRIATIC METALS

0.1

Correlation Coefficient

PARAGON GROUP  ADRIATIC METALS

Average diversification

The 3 months correlation between PARAGON and ADRIATIC is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding PARAGON GROUP and ADRIATIC METALS LS 013355 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADRIATIC METALS LS and PARAGON GROUP 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 PARAGON GROUP are associated (or correlated) with ADRIATIC METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADRIATIC METALS LS has no effect on the direction of PARAGON GROUP i.e., PARAGON GROUP and ADRIATIC METALS go up and down completely randomly.

Pair Corralation between PARAGON GROUP and ADRIATIC METALS

Assuming the 90 days trading horizon PARAGON GROUP is expected to under-perform the ADRIATIC METALS. But the stock apears to be less risky and, when comparing its historical volatility, PARAGON GROUP is 1.2 times less risky than ADRIATIC METALS. The stock trades about -0.04 of its potential returns per unit of risk. The ADRIATIC METALS LS 013355 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  230.00  in ADRIATIC METALS LS 013355 on October 23, 2024 and sell it today you would earn a total of  12.00  from holding ADRIATIC METALS LS 013355 or generate 5.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

PARAGON GROUP  vs.  ADRIATIC METALS LS 013355

PARAGON GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PARAGON GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, PARAGON GROUP is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

ADRIATIC METALS LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADRIATIC METALS LS 013355 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ADRIATIC METALS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PARAGON GROUP and ADRIATIC METALS

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

The idea behind PARAGON GROUP and ADRIATIC METALS LS 013355 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.