Correlation Between De Grey and Paragon Banking

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

By analyzing existing cross correlation between De Grey Mining and Paragon Banking Group, you can compare the effects of market volatilities on De Grey and Paragon Banking 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 De Grey with a short position of Paragon Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Paragon Banking.

Diversification Opportunities for De Grey and Paragon Banking

0.56

Correlation Coefficient

De Grey  Paragon Banking

Very weak diversification

The 3 months correlation between DGD and Paragon is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Paragon Banking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paragon Banking Group and De Grey 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 De Grey Mining are associated (or correlated) with Paragon Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paragon Banking Group has no effect on the direction of De Grey i.e., De Grey and Paragon Banking go up and down completely randomly.

Pair Corralation between De Grey and Paragon Banking

Assuming the 90 days trading horizon De Grey Mining is expected to generate 1.24 times more return on investment than Paragon Banking. However, De Grey is 1.24 times more volatile than Paragon Banking Group. It trades about 0.12 of its potential returns per unit of risk. Paragon Banking Group is currently generating about 0.05 per unit of risk. If you would invest  104.00  in De Grey Mining on December 22, 2024 and sell it today you would earn a total of  16.00  from holding De Grey Mining or generate 15.38% return on investment over 90 days.

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

De Grey Mining  vs.  Paragon Banking Group

De Grey Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Grey Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, De Grey unveiled solid returns over the last few months and may actually be approaching a breakup point.

Paragon Banking Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Paragon Banking Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Paragon Banking is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with De Grey and Paragon Banking

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

The idea behind De Grey Mining and Paragon Banking 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.