Correlation Between PAR Technology and ProStar Holdings

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

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

Diversification Opportunities for PAR Technology and ProStar Holdings

-0.87

Correlation Coefficient

PAR Technology  ProStar Holdings

Pay attention - limited upside

The 3 months correlation between PAR and ProStar is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding PAR Technology and ProStar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProStar Holdings 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 ProStar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProStar Holdings has no effect on the direction of PAR Technology i.e., PAR Technology and ProStar Holdings go up and down completely randomly.

Pair Corralation between PAR Technology and ProStar Holdings

Considering the 90-day investment horizon PAR Technology is expected to generate 0.38 times more return on investment than ProStar Holdings. However, PAR Technology is 2.62 times less risky than ProStar Holdings. It trades about 0.09 of its potential returns per unit of risk. ProStar Holdings is currently generating about 0.02 per unit of risk. If you would invest  2,654  in PAR Technology on September 23, 2024 and sell it today you would earn a total of  4,958  from holding PAR Technology or generate 186.81% return on investment over 90 days.

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

PAR Technology  vs.  ProStar Holdings

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.

ProStar Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProStar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PAR Technology and ProStar Holdings

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

The idea behind PAR Technology and ProStar Holdings 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.