Correlation Between Seagate Technology and PAR Technology

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

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

Diversification Opportunities for Seagate Technology and PAR Technology

-0.15

Correlation Coefficient

Seagate Technology  PAR Technology

Good diversification

The 3 months correlation between Seagate and PAR is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Seagate Technology PLC and PAR Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAR Technology and Seagate Technology 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 Seagate Technology PLC are associated (or correlated) with PAR Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAR Technology has no effect on the direction of Seagate Technology i.e., Seagate Technology and PAR Technology go up and down completely randomly.

Pair Corralation between Seagate Technology and PAR Technology

Considering the 90-day investment horizon Seagate Technology PLC is expected to generate 0.64 times more return on investment than PAR Technology. However, Seagate Technology PLC is 1.56 times less risky than PAR Technology. It trades about 0.22 of its potential returns per unit of risk. PAR Technology is currently generating about -0.02 per unit of risk. If you would invest  8,639  in Seagate Technology PLC on December 3, 2024 and sell it today you would earn a total of  1,552  from holding Seagate Technology PLC or generate 17.97% return on investment over 90 days.

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

Seagate Technology PLC  vs.  PAR Technology

Seagate Technology PLC

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seagate Technology PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Seagate Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

PAR Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days PAR Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Seagate Technology and PAR Technology

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

The idea behind Seagate Technology PLC and PAR Technology 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.