Correlation Between Koninklijke Ahold and Argen X

Can any of the company-specific risk be diversified away by investing in both Koninklijke Ahold 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 Koninklijke Ahold and Argen X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Koninklijke Ahold Delhaize and Argen X, you can compare the effects of market volatilities on Koninklijke Ahold 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 Koninklijke Ahold with a short position of Argen X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Ahold and Argen X.

Diversification Opportunities for Koninklijke Ahold and Argen X

0.79

Correlation Coefficient

Koninklijke Ahold  Argen X

Poor diversification

The 3 months correlation between Koninklijke and Argen is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Ahold Delhaize and Argen X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argen X and Koninklijke Ahold 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 Koninklijke Ahold Delhaize 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 Koninklijke Ahold i.e., Koninklijke Ahold and Argen X go up and down completely randomly.

Pair Corralation between Koninklijke Ahold and Argen X

Assuming the 90 days horizon Koninklijke Ahold Delhaize is expected to under-perform the Argen X. But the stock apears to be less risky and, when comparing its historical volatility, Koninklijke Ahold Delhaize is 1.89 times less risky than Argen X. The stock trades about -0.11 of its potential returns per unit of risk. The Argen X is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  53,600  in Argen X on September 19, 2024 and sell it today you would earn a total of  6,340  from holding Argen X or generate 11.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Koninklijke Ahold Delhaize  vs.  Argen X

Koninklijke Ahold

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Ahold Delhaize are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Koninklijke Ahold is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Argen X

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Argen X are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Argen X reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Koninklijke Ahold and Argen X

The main advantage of trading using opposite Koninklijke Ahold and Argen X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Ahold 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.

The idea behind Koninklijke Ahold Delhaize and Argen X 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.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.