Correlation Between Argo Group and Spire Healthcare

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Can any of the company-specific risk be diversified away by investing in both Argo Group and Spire Healthcare 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 Group and Spire Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argo Group Limited and Spire Healthcare Group, you can compare the effects of market volatilities on Argo Group and Spire Healthcare 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 Group with a short position of Spire Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Group and Spire Healthcare.

Diversification Opportunities for Argo Group and Spire Healthcare

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Argo and Spire is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Argo Group Limited and Spire Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Healthcare and Argo Group 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 Group Limited are associated (or correlated) with Spire Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Healthcare has no effect on the direction of Argo Group i.e., Argo Group and Spire Healthcare go up and down completely randomly.

Pair Corralation between Argo Group and Spire Healthcare

Assuming the 90 days trading horizon Argo Group Limited is expected to generate 1.38 times more return on investment than Spire Healthcare. However, Argo Group is 1.38 times more volatile than Spire Healthcare Group. It trades about 0.22 of its potential returns per unit of risk. Spire Healthcare Group is currently generating about 0.11 per unit of risk. If you would invest  375.00  in Argo Group Limited on September 24, 2024 and sell it today you would earn a total of  25.00  from holding Argo Group Limited or generate 6.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Argo Group Limited  vs.  Spire Healthcare Group

 Performance 
       Timeline  
Argo Group Limited 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Argo Group Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Argo Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Spire Healthcare 

Risk-Adjusted Performance

0 of 100

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

Argo Group and Spire Healthcare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Argo Group and Spire Healthcare

The main advantage of trading using opposite Argo Group and Spire Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Group position performs unexpectedly, Spire Healthcare 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 Spire Healthcare will offset losses from the drop in Spire Healthcare's long position.
The idea behind Argo Group Limited and Spire Healthcare Group 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.
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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