Correlation Between Solvay SA and Argen X
Can any of the company-specific risk be diversified away by investing in both Solvay SA and Argen X 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 Solvay SA and Argen X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solvay SA and Argen X, you can compare the effects of market volatilities on Solvay SA and Argen X 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 Solvay SA with a short position of Argen X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solvay SA and Argen X.
Diversification Opportunities for Solvay SA and Argen X
Good diversification
The 3 months correlation between Solvay and Argen is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Solvay SA and Argen X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argen X and Solvay 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 Solvay SA are associated (or correlated) with Argen X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argen X has no effect on the direction of Solvay SA i.e., Solvay SA and Argen X go up and down completely randomly.
Pair Corralation between Solvay SA and Argen X
Assuming the 90 days trading horizon Solvay SA is expected to generate 71.23 times less return on investment than Argen X. In addition to that, Solvay SA is 1.0 times more volatile than Argen X. It trades about 0.0 of its total potential returns per unit of risk. Argen X is currently generating about 0.23 per unit of volatility. If you would invest 34,070 in Argen X on August 29, 2024 and sell it today you would earn a total of 24,170 from holding Argen X or generate 70.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solvay SA vs. Argen X
Performance |
| Timeline |
| Solvay SA |
| Argen X |
Solvay SA and Argen X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solvay SA and Argen X
The main advantage of trading using opposite Solvay SA and Argen X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solvay SA position performs unexpectedly, Argen X 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 Argen X will offset losses from the drop in Argen X's long position.| Solvay SA vs. Melexis NV | Solvay SA vs. Biotalys NV | Solvay SA vs. Nextensa NV | Solvay SA vs. Belysse Group NV |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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