Correlation Between ProSomnus Common and Paragon 28

Can any of the company-specific risk be diversified away by investing in both ProSomnus Common and Paragon 28 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 ProSomnus Common and Paragon 28 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProSomnus Common Stock and Paragon 28, you can compare the effects of market volatilities on ProSomnus Common and Paragon 28 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 ProSomnus Common with a short position of Paragon 28. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProSomnus Common and Paragon 28.

Diversification Opportunities for ProSomnus Common and Paragon 28

0.59

Correlation Coefficient

ProSomnus Common  Paragon 28

Very weak diversification

The 3 months correlation between ProSomnus and Paragon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding ProSomnus Common Stock and Paragon 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paragon 28 and ProSomnus Common 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 ProSomnus Common Stock are associated (or correlated) with Paragon 28. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paragon 28 has no effect on the direction of ProSomnus Common i.e., ProSomnus Common and Paragon 28 go up and down completely randomly.

Pair Corralation between ProSomnus Common and Paragon 28

Considering the 90-day investment horizon ProSomnus Common Stock is expected to under-perform the Paragon 28. In addition to that, ProSomnus Common is 6.53 times more volatile than Paragon 28. It trades about -0.19 of its total potential returns per unit of risk. Paragon 28 is currently generating about 0.03 per unit of volatility. If you would invest  1,039  in Paragon 28 on February 5, 2024 and sell it today you would earn a total of  14.00  from holding Paragon 28 or generate 1.35% return on investment over 90 days.

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

ProSomnus Common Stock  vs.  Paragon 28

ProSomnus Common Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProSomnus Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Paragon 28

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paragon 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ProSomnus Common and Paragon 28

The main advantage of trading using opposite ProSomnus Common and Paragon 28 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProSomnus Common position performs unexpectedly, Paragon 28 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 28 will offset losses from the drop in Paragon 28's long position.

The idea behind ProSomnus Common Stock and Paragon 28 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.