Correlation Between Bank of the and United Paragon

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

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

Diversification Opportunities for Bank of the and United Paragon

-0.01

Correlation Coefficient

Bank of the  United Paragon

Good diversification

The 3 months correlation between Bank and United is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the and United Paragon Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Paragon Mining and Bank of the 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 Bank of the are associated (or correlated) with United Paragon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Paragon Mining has no effect on the direction of Bank of the i.e., Bank of the and United Paragon go up and down completely randomly.

Pair Corralation between Bank of the and United Paragon

Assuming the 90 days trading horizon Bank of the is expected to under-perform the United Paragon. But the stock apears to be less risky and, when comparing its historical volatility, Bank of the is 2.53 times less risky than United Paragon. The stock trades about -0.02 of its potential returns per unit of risk. The United Paragon Mining is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.30  in United Paragon Mining on April 4, 2025 and sell it today you would earn a total of  0.05  from holding United Paragon Mining or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	53.45%
Values	Daily Returns

Bank of the  vs.  United Paragon Mining

Bank of the

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of the has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bank of the is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

United Paragon Mining

Risk-Adjusted Performance

OK

Over the last 90 days United Paragon Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady technical and fundamental indicators, United Paragon exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of the and United Paragon

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

The idea behind Bank of the and United Paragon Mining 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.