Correlation Between Argo Investments and Hammer Metals
Can any of the company-specific risk be diversified away by investing in both Argo Investments and Hammer Metals 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 Argo Investments and Hammer Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argo Investments and Hammer Metals, you can compare the effects of market volatilities on Argo Investments and Hammer Metals 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 Argo Investments with a short position of Hammer Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Investments and Hammer Metals.
Diversification Opportunities for Argo Investments and Hammer Metals
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Argo and Hammer is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Argo Investments and Hammer Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammer Metals and Argo Investments 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 Argo Investments are associated (or correlated) with Hammer Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammer Metals has no effect on the direction of Argo Investments i.e., Argo Investments and Hammer Metals go up and down completely randomly.
Pair Corralation between Argo Investments and Hammer Metals
Assuming the 90 days trading horizon Argo Investments is expected to under-perform the Hammer Metals. But the stock apears to be less risky and, when comparing its historical volatility, Argo Investments is 10.38 times less risky than Hammer Metals. The stock trades about -0.03 of its potential returns per unit of risk. The Hammer Metals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3.30 in Hammer Metals on November 9, 2024 and sell it today you would lose (0.10) from holding Hammer Metals or give up 3.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argo Investments vs. Hammer Metals
Performance |
| Timeline |
| Argo Investments |
| Hammer Metals |
Argo Investments and Hammer Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argo Investments and Hammer Metals
The main advantage of trading using opposite Argo Investments and Hammer Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Investments position performs unexpectedly, Hammer Metals 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 Hammer Metals will offset losses from the drop in Hammer Metals' long position.| Argo Investments vs. Aneka Tambang Tbk | Argo Investments vs. Macquarie Group | Argo Investments vs. Commonwealth Bank | Argo Investments vs. Commonwealth Bank of |
| Hammer Metals vs. Evolution Mining | Hammer Metals vs. Bluescope Steel | Hammer Metals vs. Perseus Mining | Hammer Metals vs. Champion Iron |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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