Correlation Between Apple and PARAGON GROUP

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

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

Diversification Opportunities for Apple and PARAGON GROUP

0.45

Correlation Coefficient

Apple  PARAGON GROUP

Very weak diversification

The 3 months correlation between Apple and PARAGON is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and PARAGON GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARAGON GROUP and Apple 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 Apple Inc are associated (or correlated) with PARAGON GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARAGON GROUP has no effect on the direction of Apple i.e., Apple and PARAGON GROUP go up and down completely randomly.

Pair Corralation between Apple and PARAGON GROUP

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.45 times more return on investment than PARAGON GROUP. However, Apple Inc is 2.24 times less risky than PARAGON GROUP. It trades about 0.59 of its potential returns per unit of risk. PARAGON GROUP is currently generating about 0.21 per unit of risk. If you would invest  21,370  in Apple Inc on September 17, 2024 and sell it today you would earn a total of  2,245  from holding Apple Inc or generate 10.51% return on investment over 90 days.

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

Apple Inc  vs.  PARAGON GROUP

Apple Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

PARAGON GROUP

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PARAGON GROUP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Apple and PARAGON GROUP

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

The idea behind Apple Inc and PARAGON GROUP 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.