Correlation Between Xinhua Winshare and Paragon Banking

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

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

Diversification Opportunities for Xinhua Winshare and Paragon Banking

-0.27

Correlation Coefficient

Xinhua Winshare  Paragon Banking

Very good diversification

The 3 months correlation between Xinhua and Paragon is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Xinhua Winshare Publishing and Paragon Banking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paragon Banking Group and Xinhua Winshare 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 Xinhua Winshare Publishing are associated (or correlated) with Paragon Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paragon Banking Group has no effect on the direction of Xinhua Winshare i.e., Xinhua Winshare and Paragon Banking go up and down completely randomly.

Pair Corralation between Xinhua Winshare and Paragon Banking

Assuming the 90 days horizon Xinhua Winshare Publishing is expected to under-perform the Paragon Banking. In addition to that, Xinhua Winshare is 1.2 times more volatile than Paragon Banking Group. It trades about -0.09 of its total potential returns per unit of risk. Paragon Banking Group is currently generating about 0.05 per unit of volatility. If you would invest  855.00  in Paragon Banking Group on December 22, 2024 and sell it today you would earn a total of  40.00  from holding Paragon Banking Group or generate 4.68% return on investment over 90 days.

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

Xinhua Winshare Publishing  vs.  Paragon Banking Group

Xinhua Winshare Publ

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xinhua Winshare Publishing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Paragon Banking Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Paragon Banking Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Paragon Banking is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xinhua Winshare and Paragon Banking

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

The idea behind Xinhua Winshare Publishing and Paragon Banking Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.