Correlation Between Fonciere Inea and Argan SA

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

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

Diversification Opportunities for Fonciere Inea and Argan SA

-0.62

Correlation Coefficient

Fonciere Inea  Argan SA

Excellent diversification

The 3 months correlation between Fonciere and Argan is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Fonciere Inea and Argan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argan SA and Fonciere Inea 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 Fonciere Inea are associated (or correlated) with Argan SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argan SA has no effect on the direction of Fonciere Inea i.e., Fonciere Inea and Argan SA go up and down completely randomly.

Pair Corralation between Fonciere Inea and Argan SA

Assuming the 90 days trading horizon Fonciere Inea is expected to under-perform the Argan SA. But the stock apears to be less risky and, when comparing its historical volatility, Fonciere Inea is 1.5 times less risky than Argan SA. The stock trades about -0.03 of its potential returns per unit of risk. The Argan SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  7,117  in Argan SA on September 5, 2024 and sell it today you would lose (817.00) from holding Argan SA or give up 11.48% of portfolio value over 90 days.

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

Fonciere Inea  vs.  Argan SA

Fonciere Inea

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fonciere Inea are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fonciere Inea is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Fonciere Inea and Argan SA

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

The idea behind Fonciere Inea and Argan 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.