Correlation Between ScanSource and Paragon Technologies

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

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

Diversification Opportunities for ScanSource and Paragon Technologies

0.02

Correlation Coefficient

ScanSource  Paragon Technologies

Significant diversification

The 3 months correlation between ScanSource and Paragon is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Paragon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paragon Technologies and ScanSource 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 ScanSource are associated (or correlated) with Paragon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paragon Technologies has no effect on the direction of ScanSource i.e., ScanSource and Paragon Technologies go up and down completely randomly.

Pair Corralation between ScanSource and Paragon Technologies

Given the investment horizon of 90 days ScanSource is expected to generate 0.48 times more return on investment than Paragon Technologies. However, ScanSource is 2.07 times less risky than Paragon Technologies. It trades about 0.09 of its potential returns per unit of risk. Paragon Technologies is currently generating about -0.24 per unit of risk. If you would invest  3,433  in ScanSource on May 5, 2025 and sell it today you would earn a total of  345.00  from holding ScanSource or generate 10.05% return on investment over 90 days.

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

ScanSource  vs.  Paragon Technologies

ScanSource

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ScanSource may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Paragon Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paragon Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ScanSource and Paragon Technologies

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

The idea behind ScanSource and Paragon Technologies 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.