Correlation Between Argan SA and Societe De
Can any of the company-specific risk be diversified away by investing in both Argan SA and Societe De 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 Argan SA and Societe De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argan SA and Societe de la, you can compare the effects of market volatilities on Argan SA and Societe De 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 Argan SA with a short position of Societe De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argan SA and Societe De.
Diversification Opportunities for Argan SA and Societe De
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Argan and Societe is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Argan SA and Societe de la in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Societe de la and Argan SA 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 Argan SA are associated (or correlated) with Societe De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Societe de la has no effect on the direction of Argan SA i.e., Argan SA and Societe De go up and down completely randomly.
Pair Corralation between Argan SA and Societe De
Assuming the 90 days trading horizon Argan SA is expected to generate 0.36 times more return on investment than Societe De. However, Argan SA is 2.74 times less risky than Societe De. It trades about -0.17 of its potential returns per unit of risk. Societe de la is currently generating about -0.4 per unit of risk. If you would invest 7,370 in Argan SA on August 30, 2024 and sell it today you would lose (710.00) from holding Argan SA or give up 9.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argan SA vs. Societe de la
Performance |
| Timeline |
| Argan SA |
| Societe de la |
Argan SA and Societe De Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argan SA and Societe De
The main advantage of trading using opposite Argan SA and Societe De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argan SA position performs unexpectedly, Societe De 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 Societe De will offset losses from the drop in Societe De's long position.The idea behind Argan SA and Societe de la 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.| Societe De vs. Mercialys SA | Societe De vs. Icade SA | Societe De vs. Gecina SA | Societe De vs. Altarea SCA |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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