Correlation Between Bank Central and Argo Gold
Can any of the company-specific risk be diversified away by investing in both Bank Central and Argo Gold 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 Bank Central and Argo Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and Argo Gold, you can compare the effects of market volatilities on Bank Central and Argo Gold 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 Bank Central with a short position of Argo Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Argo Gold.
Diversification Opportunities for Bank Central and Argo Gold
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Argo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Argo Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Gold and Bank Central 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 Bank Central Asia are associated (or correlated) with Argo Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Gold has no effect on the direction of Bank Central i.e., Bank Central and Argo Gold go up and down completely randomly.
Pair Corralation between Bank Central and Argo Gold
Assuming the 90 days horizon Bank Central is expected to generate 3.69 times less return on investment than Argo Gold. But when comparing it to its historical volatility, Bank Central Asia is 4.44 times less risky than Argo Gold. It trades about 0.06 of its potential returns per unit of risk. Argo Gold is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.81 in Argo Gold on August 29, 2024 and sell it today you would earn a total of 0.93 from holding Argo Gold or generate 19.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. Argo Gold
Performance |
| Timeline |
| Bank Central Asia |
| Argo Gold |
Bank Central and Argo Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Argo Gold
The main advantage of trading using opposite Bank Central and Argo Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Argo Gold 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 Gold will offset losses from the drop in Argo Gold's long position.| Bank Central vs. Israel Discount Bank | Bank Central vs. Baraboo Bancorporation | Bank Central vs. Danske Bank AS | Bank Central vs. Jyske Bank AS |
| Argo Gold vs. Vertiv Holdings Co | Argo Gold vs. Nasdaq Inc | Argo Gold vs. McDonalds | Argo Gold vs. Walmart |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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