Correlation Between Berkshire Hathaway and Paragon GmbH

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

By analyzing existing cross correlation between Berkshire Hathaway and paragon GmbH Co, you can compare the effects of market volatilities on Berkshire Hathaway and Paragon GmbH 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 Berkshire Hathaway with a short position of Paragon GmbH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Paragon GmbH.

Diversification Opportunities for Berkshire Hathaway and Paragon GmbH

-0.35

Correlation Coefficient

Berkshire Hathaway  Paragon GmbH

Very good diversification

The 3 months correlation between Berkshire and Paragon is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and paragon GmbH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on paragon GmbH and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Paragon GmbH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of paragon GmbH has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Paragon GmbH go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Paragon GmbH

Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 0.27 times more return on investment than Paragon GmbH. However, Berkshire Hathaway is 3.64 times less risky than Paragon GmbH. It trades about 0.15 of its potential returns per unit of risk. paragon GmbH Co is currently generating about 0.02 per unit of risk. If you would invest  40,545  in Berkshire Hathaway on October 6, 2024 and sell it today you would earn a total of  3,590  from holding Berkshire Hathaway or generate 8.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

Berkshire Hathaway  vs.  paragon GmbH Co

Berkshire Hathaway

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Berkshire Hathaway may actually be approaching a critical reversion point that can send shares even higher in February 2025.

paragon GmbH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days paragon GmbH Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Berkshire Hathaway and Paragon GmbH

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

The idea behind Berkshire Hathaway and paragon GmbH Co 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..