Correlation Between Surge Components and Paragon Technologies

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

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

Diversification Opportunities for Surge Components and Paragon Technologies

-0.54

Correlation Coefficient

Surge Components  Paragon Technologies

Excellent diversification

The 3 months correlation between Surge and Paragon is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Surge Components and Paragon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paragon Technologies and Surge Components 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 Surge Components 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 Surge Components i.e., Surge Components and Paragon Technologies go up and down completely randomly.

Pair Corralation between Surge Components and Paragon Technologies

Given the investment horizon of 90 days Surge Components is expected to generate 31.47 times less return on investment than Paragon Technologies. In addition to that, Surge Components is 1.05 times more volatile than Paragon Technologies. It trades about 0.0 of its total potential returns per unit of risk. Paragon Technologies is currently generating about 0.04 per unit of volatility. If you would invest  695.00  in Paragon Technologies on October 10, 2024 and sell it today you would earn a total of  255.00  from holding Paragon Technologies or generate 36.69% return on investment over 90 days.

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

Surge Components  vs.  Paragon Technologies

Surge Components

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surge Components has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Surge Components is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 abnormal basic indicators, Paragon Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Surge Components and Paragon Technologies

The main advantage of trading using opposite Surge Components and Paragon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Surge Components 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 Surge Components 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.