Correlation Between Argo Investments and Mount Ridley

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

By analyzing existing cross correlation between Argo Investments and Mount Ridley Mines, you can compare the effects of market volatilities on Argo Investments and Mount Ridley 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 Investments with a short position of Mount Ridley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Investments and Mount Ridley.

Diversification Opportunities for Argo Investments and Mount Ridley

0.0

Correlation Coefficient

Argo Investments  Mount Ridley

Pay attention - limited upside

The 3 months correlation between Argo and Mount is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Argo Investments and Mount Ridley Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mount Ridley Mines and Argo Investments 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 Investments are associated (or correlated) with Mount Ridley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mount Ridley Mines has no effect on the direction of Argo Investments i.e., Argo Investments and Mount Ridley go up and down completely randomly.

Pair Corralation between Argo Investments and Mount Ridley

Assuming the 90 days trading horizon Argo Investments is expected to generate 62.63 times less return on investment than Mount Ridley. But when comparing it to its historical volatility, Argo Investments is 27.39 times less risky than Mount Ridley. It trades about 0.02 of its potential returns per unit of risk. Mount Ridley Mines is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5.50  in Mount Ridley Mines on September 24, 2024 and sell it today you would lose (4.50) from holding Mount Ridley Mines or give up 81.82% of portfolio value over 90 days.

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

Argo Investments  vs.  Mount Ridley Mines

Argo Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argo Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Argo Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Mount Ridley Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mount Ridley Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Mount Ridley is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Argo Investments and Mount Ridley

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

The idea behind Argo Investments and Mount Ridley Mines 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.