Correlation Between Astar and Paragon Banking
Can any of the company-specific risk be diversified away by investing in both Astar 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 Astar and Paragon Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Paragon Banking Group, you can compare the effects of market volatilities on Astar 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 Astar with a short position of Paragon Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Paragon Banking.
Diversification Opportunities for Astar and Paragon Banking
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Astar and Paragon is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Astar 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 Astar 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 Astar 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 Astar i.e., Astar and Paragon Banking go up and down completely randomly.
Pair Corralation between Astar and Paragon Banking
Assuming the 90 days trading horizon Astar is expected to under-perform the Paragon Banking. In addition to that, Astar is 2.03 times more volatile than Paragon Banking Group. It trades about -0.19 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 890.00 in Paragon Banking Group on October 28, 2024 and sell it today you would earn a total of 15.00 from holding Paragon Banking Group or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Astar vs. Paragon Banking Group
Performance |
| Timeline |
| Astar |
| Paragon Banking Group |
Astar and Paragon Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Paragon Banking
The main advantage of trading using opposite Astar and Paragon Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar 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 Astar 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.| Paragon Banking vs. Carsales | Paragon Banking vs. Verizon Communications | Paragon Banking vs. TRADELINK ELECTRON | Paragon Banking vs. Ribbon Communications |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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