Correlation Between Flagship Investments and Argo Investments
Can any of the company-specific risk be diversified away by investing in both Flagship Investments and Argo Investments 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 Flagship Investments and Argo Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flagship Investments and Argo Investments, you can compare the effects of market volatilities on Flagship Investments and Argo Investments 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 Flagship Investments with a short position of Argo Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flagship Investments and Argo Investments.
Diversification Opportunities for Flagship Investments and Argo Investments
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flagship and Argo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments and Argo Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Investments and Flagship 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 Flagship Investments are associated (or correlated) with Argo Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Investments has no effect on the direction of Flagship Investments i.e., Flagship Investments and Argo Investments go up and down completely randomly.
Pair Corralation between Flagship Investments and Argo Investments
Assuming the 90 days trading horizon Flagship Investments is expected to generate 2.59 times more return on investment than Argo Investments. However, Flagship Investments is 2.59 times more volatile than Argo Investments. It trades about 0.04 of its potential returns per unit of risk. Argo Investments is currently generating about -0.03 per unit of risk. If you would invest 210.00 in Flagship Investments on November 9, 2024 and sell it today you would earn a total of 2.00 from holding Flagship Investments or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flagship Investments vs. Argo Investments
Performance |
| Timeline |
| Flagship Investments |
| Argo Investments |
Flagship Investments and Argo Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flagship Investments and Argo Investments
The main advantage of trading using opposite Flagship Investments and Argo Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flagship Investments position performs unexpectedly, Argo Investments 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 Argo Investments will offset losses from the drop in Argo Investments' long position.| Flagship Investments vs. Metro Mining | Flagship Investments vs. MetalsGrove Mining | Flagship Investments vs. Evolution Mining | Flagship Investments vs. Mount Gibson Iron |
| Argo Investments vs. Aneka Tambang Tbk | Argo Investments vs. Macquarie Group | Argo Investments vs. Commonwealth Bank | Argo Investments vs. Commonwealth Bank of |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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