Correlation Between Argo Group and Hardide PLC

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

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

Diversification Opportunities for Argo Group and Hardide PLC

0.08

Correlation Coefficient

Argo Group  Hardide PLC

Significant diversification

The 3 months correlation between Argo and Hardide is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Argo Group Limited and Hardide PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hardide PLC and Argo Group 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 Group Limited are associated (or correlated) with Hardide PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hardide PLC has no effect on the direction of Argo Group i.e., Argo Group and Hardide PLC go up and down completely randomly.

Pair Corralation between Argo Group and Hardide PLC

Assuming the 90 days trading horizon Argo Group is expected to generate 1.42 times less return on investment than Hardide PLC. But when comparing it to its historical volatility, Argo Group Limited is 1.64 times less risky than Hardide PLC. It trades about 0.01 of its potential returns per unit of risk. Hardide PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  613.00  in Hardide PLC on September 23, 2024 and sell it today you would lose (13.00) from holding Hardide PLC or give up 2.12% of portfolio value over 90 days.

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

Argo Group Limited  vs.  Hardide PLC

Argo Group Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Group Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Argo Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hardide PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hardide PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hardide PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Argo Group and Hardide PLC

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

The idea behind Argo Group Limited and Hardide PLC 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.