Correlation Between Paragon 28 and Regional Health

Can any of the company-specific risk be diversified away by investing in both Paragon 28 and Regional Health 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 Paragon 28 and Regional Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Paragon 28 and Regional Health Properties, you can compare the effects of market volatilities on Paragon 28 and Regional Health 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 Paragon 28 with a short position of Regional Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paragon 28 and Regional Health.

Diversification Opportunities for Paragon 28 and Regional Health

-0.65

Correlation Coefficient

Paragon 28  Regional Health

Excellent diversification

The 3 months correlation between Paragon and Regional is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Paragon 28 and Regional Health Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Health Prop and Paragon 28 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 Paragon 28 are associated (or correlated) with Regional Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Health Prop has no effect on the direction of Paragon 28 i.e., Paragon 28 and Regional Health go up and down completely randomly.

Pair Corralation between Paragon 28 and Regional Health

Considering the 90-day investment horizon Paragon 28 is expected to under-perform the Regional Health. But the stock apears to be less risky and, when comparing its historical volatility, Paragon 28 is 1.03 times less risky than Regional Health. The stock trades about -0.01 of its potential returns per unit of risk. The Regional Health Properties is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  299.00  in Regional Health Properties on September 2, 2024 and sell it today you would lose (125.00) from holding Regional Health Properties or give up 41.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Paragon 28  vs.  Regional Health Properties

Paragon 28

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paragon 28 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Paragon 28 sustained solid returns over the last few months and may actually be approaching a breakup point.

Regional Health Prop

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Regional Health Properties are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Regional Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Paragon 28 and Regional Health

The main advantage of trading using opposite Paragon 28 and Regional Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paragon 28 position performs unexpectedly, Regional Health 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 Regional Health will offset losses from the drop in Regional Health's long position.

The idea behind Paragon 28 and Regional Health Properties 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.