Correlation Between Argen X and Sequana Medical
Can any of the company-specific risk be diversified away by investing in both Argen X and Sequana Medical 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 Argen X and Sequana Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argen X and Sequana Medical NV, you can compare the effects of market volatilities on Argen X and Sequana Medical 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 Argen X with a short position of Sequana Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argen X and Sequana Medical.
Diversification Opportunities for Argen X and Sequana Medical
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Argen and Sequana is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Argen X and Sequana Medical NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sequana Medical NV and Argen X 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 Argen X are associated (or correlated) with Sequana Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sequana Medical NV has no effect on the direction of Argen X i.e., Argen X and Sequana Medical go up and down completely randomly.
Pair Corralation between Argen X and Sequana Medical
Assuming the 90 days trading horizon Argen X is expected to generate 0.18 times more return on investment than Sequana Medical. However, Argen X is 5.53 times less risky than Sequana Medical. It trades about -0.02 of its potential returns per unit of risk. Sequana Medical NV is currently generating about -0.32 per unit of risk. If you would invest 64,140 in Argen X on November 9, 2024 and sell it today you would lose (340.00) from holding Argen X or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argen X vs. Sequana Medical NV
Performance |
| Timeline |
| Argen X |
| Sequana Medical NV |
Argen X and Sequana Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argen X and Sequana Medical
The main advantage of trading using opposite Argen X and Sequana Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argen X position performs unexpectedly, Sequana Medical 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 Sequana Medical will offset losses from the drop in Sequana Medical's long position.The idea behind Argen X and Sequana Medical NV 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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