Correlation Between Argen X and Cenergy Holdings

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

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

Diversification Opportunities for Argen X and Cenergy Holdings

-0.58

Correlation Coefficient

Argen X  Cenergy Holdings

Excellent diversification

The 3 months correlation between Argen and Cenergy is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Argen X and Cenergy Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenergy Holdings and Argen X 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 Argen X are associated (or correlated) with Cenergy Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenergy Holdings has no effect on the direction of Argen X i.e., Argen X and Cenergy Holdings go up and down completely randomly.

Pair Corralation between Argen X and Cenergy Holdings

Assuming the 90 days trading horizon Argen X is expected to generate 0.75 times more return on investment than Cenergy Holdings. However, Argen X is 1.34 times less risky than Cenergy Holdings. It trades about 0.19 of its potential returns per unit of risk. Cenergy Holdings SA is currently generating about 0.02 per unit of risk. If you would invest  52,260  in Argen X on September 23, 2024 and sell it today you would earn a total of  8,200  from holding Argen X or generate 15.69% return on investment over 90 days.

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

Argen X  vs.  Cenergy Holdings SA

Argen X

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Argen X are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Argen X reported solid returns over the last few months and may actually be approaching a breakup point.

Cenergy Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cenergy Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Argen X and Cenergy Holdings

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

The idea behind Argen X and Cenergy Holdings 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 Transaction History module to view history of all your transactions and understand their impact on performance.