Correlation Between Argan SA and Icade SA

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

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

Diversification Opportunities for Argan SA and Icade SA

0.84

Correlation Coefficient

Argan SA  Icade SA

Very poor diversification

The 3 months correlation between Argan and Icade is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Argan SA and Icade SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icade SA and Argan 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 Argan SA are associated (or correlated) with Icade SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icade SA has no effect on the direction of Argan SA i.e., Argan SA and Icade SA go up and down completely randomly.

Pair Corralation between Argan SA and Icade SA

Assuming the 90 days trading horizon Argan SA is expected to under-perform the Icade SA. But the stock apears to be less risky and, when comparing its historical volatility, Argan SA is 1.15 times less risky than Icade SA. The stock trades about -0.2 of its potential returns per unit of risk. The Icade SA is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  2,544  in Icade SA on September 13, 2024 and sell it today you would lose (334.00) from holding Icade SA or give up 13.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Argan SA  vs.  Icade SA

Argan SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argan SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Icade SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icade SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Argan SA and Icade SA

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

The idea behind Argan SA and Icade SA 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.