Correlation Between Aware and PAR Technology

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

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

Diversification Opportunities for Aware and PAR Technology

-0.61

Correlation Coefficient

Aware  PAR Technology

Excellent diversification

The 3 months correlation between Aware and PAR is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aware Inc and PAR Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAR Technology and Aware 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 Aware Inc are associated (or correlated) with PAR Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAR Technology has no effect on the direction of Aware i.e., Aware and PAR Technology go up and down completely randomly.

Pair Corralation between Aware and PAR Technology

Given the investment horizon of 90 days Aware Inc is expected to generate 3.28 times more return on investment than PAR Technology. However, Aware is 3.28 times more volatile than PAR Technology. It trades about 0.14 of its potential returns per unit of risk. PAR Technology is currently generating about -0.39 per unit of risk. If you would invest  146.00  in Aware Inc on October 16, 2024 and sell it today you would earn a total of  21.00  from holding Aware Inc or generate 14.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Aware Inc  vs.  PAR Technology

Aware Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aware Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

PAR Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PAR Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, PAR Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aware and PAR Technology

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

The idea behind Aware Inc and PAR Technology 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.