Correlation Between Paragon Technologies and Polydex Pharmaceuticals

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

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

Diversification Opportunities for Paragon Technologies and Polydex Pharmaceuticals

0.43

Correlation Coefficient

Paragon Technologies  Polydex Pharmaceuticals

Very weak diversification

The 3 months correlation between Paragon and Polydex is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Paragon Technologies and Polydex Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polydex Pharmaceuticals and Paragon Technologies 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 Technologies are associated (or correlated) with Polydex Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polydex Pharmaceuticals has no effect on the direction of Paragon Technologies i.e., Paragon Technologies and Polydex Pharmaceuticals go up and down completely randomly.

Pair Corralation between Paragon Technologies and Polydex Pharmaceuticals

If you would invest  601.00  in Paragon Technologies on October 9, 2024 and sell it today you would earn a total of  349.00  from holding Paragon Technologies or generate 58.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.64%
Values	Daily Returns

Paragon Technologies  vs.  Polydex Pharmaceuticals

Paragon Technologies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paragon Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Paragon Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Polydex Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polydex Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Polydex Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Paragon Technologies and Polydex Pharmaceuticals

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

The idea behind Paragon Technologies and Polydex Pharmaceuticals 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.