Correlation Between Senstar Technologies and Paragon Technologies

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

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

Diversification Opportunities for Senstar Technologies and Paragon Technologies

0.75

Correlation Coefficient

Senstar Technologies  Paragon Technologies

Poor diversification

The 3 months correlation between Senstar and Paragon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Senstar Technologies and Paragon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paragon Technologies and Senstar 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 Senstar Technologies are associated (or correlated) with Paragon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paragon Technologies has no effect on the direction of Senstar Technologies i.e., Senstar Technologies and Paragon Technologies go up and down completely randomly.

Pair Corralation between Senstar Technologies and Paragon Technologies

Considering the 90-day investment horizon Senstar Technologies is expected to generate 1.03 times less return on investment than Paragon Technologies. But when comparing it to its historical volatility, Senstar Technologies is 1.1 times less risky than Paragon Technologies. It trades about 0.22 of its potential returns per unit of risk. Paragon Technologies is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  800.00  in Paragon Technologies on October 11, 2024 and sell it today you would earn a total of  150.00  from holding Paragon Technologies or generate 18.75% return on investment over 90 days.

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

Senstar Technologies  vs.  Paragon Technologies

Senstar Technologies

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Senstar Technologies are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Senstar Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Senstar Technologies and Paragon Technologies

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

The idea behind Senstar Technologies and Paragon Technologies 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.