Correlation Between PAR Technology and Issuer Direct

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

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

Diversification Opportunities for PAR Technology and Issuer Direct

-0.72

Correlation Coefficient

PAR Technology  Issuer Direct

Pay attention - limited upside

The 3 months correlation between PAR and Issuer is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding PAR Technology and Issuer Direct Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Issuer Direct Corp and PAR Technology 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 PAR Technology are associated (or correlated) with Issuer Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Issuer Direct Corp has no effect on the direction of PAR Technology i.e., PAR Technology and Issuer Direct go up and down completely randomly.

Pair Corralation between PAR Technology and Issuer Direct

Considering the 90-day investment horizon PAR Technology is expected to generate 0.81 times more return on investment than Issuer Direct. However, PAR Technology is 1.23 times less risky than Issuer Direct. It trades about 0.11 of its potential returns per unit of risk. Issuer Direct Corp is currently generating about -0.05 per unit of risk. If you would invest  3,800  in PAR Technology on September 23, 2024 and sell it today you would earn a total of  3,812  from holding PAR Technology or generate 100.32% return on investment over 90 days.

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

PAR Technology  vs.  Issuer Direct Corp

PAR Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PAR Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, PAR Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Issuer Direct Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Issuer Direct Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with PAR Technology and Issuer Direct

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

The idea behind PAR Technology and Issuer Direct Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.