Correlation Between Fountain and Argen X

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

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

Diversification Opportunities for Fountain and Argen X

-0.71

Correlation Coefficient

Fountain  Argen X

Pay attention - limited upside

The 3 months correlation between Fountain and Argen is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fountain and Argen X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argen X and Fountain 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 Fountain are associated (or correlated) with Argen X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argen X has no effect on the direction of Fountain i.e., Fountain and Argen X go up and down completely randomly.

Pair Corralation between Fountain and Argen X

Assuming the 90 days trading horizon Fountain is expected to under-perform the Argen X. In addition to that, Fountain is 2.29 times more volatile than Argen X. It trades about -0.06 of its total potential returns per unit of risk. Argen X is currently generating about 0.22 per unit of volatility. If you would invest  48,200  in Argen X on September 20, 2024 and sell it today you would earn a total of  12,800  from holding Argen X or generate 26.56% return on investment over 90 days.

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

Fountain  vs.  Argen X

Fountain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fountain has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Argen X

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Argen X are ranked lower than 17 (%) 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.

Pair Trading with Fountain and Argen X

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

The idea behind Fountain and Argen X 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.