Correlation Between Argo Blockchain and DeFi Technologies

Can any of the company-specific risk be diversified away by investing in both Argo Blockchain and DeFi Technologies 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 DeFi Technologies 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 DeFi Technologies, you can compare the effects of market volatilities on Argo Blockchain and DeFi Technologies 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 DeFi Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Blockchain and DeFi Technologies.

Diversification Opportunities for Argo Blockchain and DeFi Technologies

-0.23

Correlation Coefficient

Argo Blockchain  DeFi Technologies

Very good diversification

The 3 months correlation between Argo and DeFi is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Argo Blockchain PLC and DeFi Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DeFi Technologies 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 DeFi Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DeFi Technologies has no effect on the direction of Argo Blockchain i.e., Argo Blockchain and DeFi Technologies go up and down completely randomly.

Pair Corralation between Argo Blockchain and DeFi Technologies

Assuming the 90 days horizon Argo Blockchain is expected to generate 2.35 times less return on investment than DeFi Technologies. In addition to that, Argo Blockchain is 1.39 times more volatile than DeFi Technologies. It trades about 0.02 of its total potential returns per unit of risk. DeFi Technologies is currently generating about 0.08 per unit of volatility. If you would invest  203.00  in DeFi Technologies on September 2, 2024 and sell it today you would earn a total of  45.00  from holding DeFi Technologies or generate 22.17% return on investment over 90 days.

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

Argo Blockchain PLC  vs.  DeFi Technologies

Argo Blockchain PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Blockchain PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking signals, Argo Blockchain reported solid returns over the last few months and may actually be approaching a breakup point.

DeFi Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DeFi Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DeFi Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Argo Blockchain and DeFi Technologies

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

The idea behind Argo Blockchain PLC and DeFi Technologies 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.