Correlation Between Paragon Technologies and Surge Components

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

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

Diversification Opportunities for Paragon Technologies and Surge Components

-0.41

Correlation Coefficient

Paragon Technologies  Surge Components

Very good diversification

The 3 months correlation between Paragon and Surge is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Paragon Technologies and Surge Components in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Components 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 Surge Components. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Components has no effect on the direction of Paragon Technologies i.e., Paragon Technologies and Surge Components go up and down completely randomly.

Pair Corralation between Paragon Technologies and Surge Components

Given the investment horizon of 90 days Paragon Technologies is expected to generate 1.45 times more return on investment than Surge Components. However, Paragon Technologies is 1.45 times more volatile than Surge Components. It trades about 0.07 of its potential returns per unit of risk. Surge Components is currently generating about 0.07 per unit of risk. If you would invest  690.00  in Paragon Technologies on September 4, 2024 and sell it today you would earn a total of  85.00  from holding Paragon Technologies or generate 12.32% return on investment over 90 days.

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

Paragon Technologies  vs.  Surge Components

Paragon Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paragon Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Paragon Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Surge Components

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Surge Components are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Surge Components may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Paragon Technologies and Surge Components

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

The idea behind Paragon Technologies and Surge Components 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.