Correlation Between PAR Technology and T M

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

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

Diversification Opportunities for PAR Technology and T M

-0.72

Correlation Coefficient

PAR Technology  T M

Pay attention - limited upside

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

Pair Corralation between PAR Technology and T M

Considering the 90-day investment horizon PAR Technology is expected to under-perform the T M. But the stock apears to be less risky and, when comparing its historical volatility, PAR Technology is 15.6 times less risky than T M. The stock trades about -0.3 of its potential returns per unit of risk. The T M M is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.48  in T M M on September 29, 2024 and sell it today you would lose (0.11) from holding T M M or give up 22.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

PAR Technology  vs.  T M M

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.

T M M

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in T M M are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal primary indicators, T M demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PAR Technology and T M

The main advantage of trading using opposite PAR Technology and T M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PAR Technology position performs unexpectedly, T M 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 T M will offset losses from the drop in T M's long position.

The idea behind PAR Technology and T M M 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.