Correlation Between Argo Blockchain and OFX Group

Can any of the company-specific risk be diversified away by investing in both Argo Blockchain and OFX Group 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 Argo Blockchain and OFX Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Argo Blockchain PLC and OFX Group Ltd, you can compare the effects of market volatilities on Argo Blockchain and OFX Group 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 Argo Blockchain with a short position of OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Blockchain and OFX Group.

Diversification Opportunities for Argo Blockchain and OFX Group

0.56

Correlation Coefficient

Argo Blockchain  OFX Group

Very weak diversification

The 3 months correlation between Argo and OFX is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Argo Blockchain PLC and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group and Argo Blockchain 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 Argo Blockchain PLC are associated (or correlated) with OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Argo Blockchain i.e., Argo Blockchain and OFX Group go up and down completely randomly.

Pair Corralation between Argo Blockchain and OFX Group

Given the investment horizon of 90 days Argo Blockchain PLC is expected to generate 2.11 times more return on investment than OFX Group. However, Argo Blockchain is 2.11 times more volatile than OFX Group Ltd. It trades about 0.03 of its potential returns per unit of risk. OFX Group Ltd is currently generating about -0.01 per unit of risk. If you would invest  116.00  in Argo Blockchain PLC on September 21, 2024 and sell it today you would lose (55.00) from holding Argo Blockchain PLC or give up 47.41% of portfolio value over 90 days.

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

Argo Blockchain PLC  vs.  OFX Group Ltd

Argo Blockchain PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argo Blockchain PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

OFX Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OFX Group Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, OFX Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Argo Blockchain and OFX Group

The main advantage of trading using opposite Argo Blockchain and OFX Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Blockchain position performs unexpectedly, OFX Group 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 OFX Group will offset losses from the drop in OFX Group's long position.

The idea behind Argo Blockchain PLC and OFX Group Ltd 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.