Correlation Between Eline Entertainment and Paragon Technologies

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

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

Diversification Opportunities for Eline Entertainment and Paragon Technologies

0.47

Correlation Coefficient

Eline Entertainment  Paragon Technologies

Very weak diversification

The 3 months correlation between Eline and Paragon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Eline Entertainment Group and Paragon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paragon Technologies and Eline Entertainment 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 Eline Entertainment Group are associated (or correlated) with Paragon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paragon Technologies has no effect on the direction of Eline Entertainment i.e., Eline Entertainment and Paragon Technologies go up and down completely randomly.

Pair Corralation between Eline Entertainment and Paragon Technologies

Given the investment horizon of 90 days Eline Entertainment Group is expected to generate 4.0 times more return on investment than Paragon Technologies. However, Eline Entertainment is 4.0 times more volatile than Paragon Technologies. It trades about 0.11 of its potential returns per unit of risk. Paragon Technologies is currently generating about 0.05 per unit of risk. If you would invest  0.02  in Eline Entertainment Group on December 28, 2024 and sell it today you would earn a total of  0.01  from holding Eline Entertainment Group or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Eline Entertainment Group  vs.  Paragon Technologies

Eline Entertainment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eline Entertainment Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Eline Entertainment demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Paragon Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Paragon Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Paragon Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eline Entertainment and Paragon Technologies

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

The idea behind Eline Entertainment Group and Paragon Technologies 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.