Correlation Between Paramount Communications and Selan Exploration
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By analyzing existing cross correlation between Paramount Communications Limited and Selan Exploration Technology, you can compare the effects of market volatilities on Paramount Communications and Selan Exploration 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 Paramount Communications with a short position of Selan Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Communications and Selan Exploration.
Diversification Opportunities for Paramount Communications and Selan Exploration
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Paramount and Selan is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Communications Limit and Selan Exploration Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selan Exploration and Paramount Communications 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 Paramount Communications Limited are associated (or correlated) with Selan Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selan Exploration has no effect on the direction of Paramount Communications i.e., Paramount Communications and Selan Exploration go up and down completely randomly.
Pair Corralation between Paramount Communications and Selan Exploration
Assuming the 90 days trading horizon Paramount Communications Limited is expected to under-perform the Selan Exploration. But the stock apears to be less risky and, when comparing its historical volatility, Paramount Communications Limited is 1.27 times less risky than Selan Exploration. The stock trades about -0.04 of its potential returns per unit of risk. The Selan Exploration Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 52,510 in Selan Exploration Technology on November 1, 2024 and sell it today you would earn a total of 11,980 from holding Selan Exploration Technology or generate 22.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Paramount Communications Limit vs. Selan Exploration Technology
Performance |
| Timeline |
| Paramount Communications |
| Selan Exploration |
Paramount Communications and Selan Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Communications and Selan Exploration
The main advantage of trading using opposite Paramount Communications and Selan Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Communications position performs unexpectedly, Selan Exploration 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 Selan Exploration will offset losses from the drop in Selan Exploration's long position.The idea behind Paramount Communications Limited and Selan Exploration 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.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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