Correlation Between Paragon GmbH and CDL INVESTMENT

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

By analyzing existing cross correlation between paragon GmbH Co and CDL INVESTMENT, you can compare the effects of market volatilities on Paragon GmbH and CDL INVESTMENT 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 GmbH with a short position of CDL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paragon GmbH and CDL INVESTMENT.

Diversification Opportunities for Paragon GmbH and CDL INVESTMENT

0.21

Correlation Coefficient

Paragon GmbH  CDL INVESTMENT

Modest diversification

The 3 months correlation between Paragon and CDL is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding paragon GmbH Co and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT and Paragon GmbH 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 GmbH Co are associated (or correlated) with CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of Paragon GmbH i.e., Paragon GmbH and CDL INVESTMENT go up and down completely randomly.

Pair Corralation between Paragon GmbH and CDL INVESTMENT

Assuming the 90 days horizon paragon GmbH Co is expected to generate 8.88 times more return on investment than CDL INVESTMENT. However, Paragon GmbH is 8.88 times more volatile than CDL INVESTMENT. It trades about 0.14 of its potential returns per unit of risk. CDL INVESTMENT is currently generating about -0.05 per unit of risk. If you would invest  172.00  in paragon GmbH Co on December 20, 2024 and sell it today you would earn a total of  258.00  from holding paragon GmbH Co or generate 150.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

paragon GmbH Co  vs.  CDL INVESTMENT

paragon GmbH

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in paragon GmbH Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Paragon GmbH reported solid returns over the last few months and may actually be approaching a breakup point.

CDL INVESTMENT

Risk-Adjusted Performance

Very Weak

Over the last 90 days CDL INVESTMENT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CDL INVESTMENT is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Paragon GmbH and CDL INVESTMENT

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

The idea behind paragon GmbH Co and CDL INVESTMENT 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.