Correlation Between Movella Holdings and PAR Technology

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

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

Diversification Opportunities for Movella Holdings and PAR Technology

0.75

Correlation Coefficient

Movella Holdings  PAR Technology

Poor diversification

The 3 months correlation between Movella and PAR is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Movella Holdings and PAR Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAR Technology and Movella Holdings 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 Movella Holdings 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 Movella Holdings i.e., Movella Holdings and PAR Technology go up and down completely randomly.

Pair Corralation between Movella Holdings and PAR Technology

Given the investment horizon of 90 days Movella Holdings is expected to under-perform the PAR Technology. In addition to that, Movella Holdings is 3.16 times more volatile than PAR Technology. It trades about -0.09 of its total potential returns per unit of risk. PAR Technology is currently generating about 0.09 per unit of volatility. If you would invest  2,630  in PAR Technology on September 28, 2024 and sell it today you would earn a total of  4,698  from holding PAR Technology or generate 178.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	27.42%
Values	Daily Returns

Movella Holdings  vs.  PAR Technology

Movella Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Movella Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Movella Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

PAR Technology

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PAR Technology are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, PAR Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Movella Holdings and PAR Technology

The main advantage of trading using opposite Movella Holdings and PAR Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Movella Holdings 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 Movella Holdings 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..