Correlation Between Mercialys and Argan SA

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

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

Diversification Opportunities for Mercialys and Argan SA

0.0

Correlation Coefficient

Mercialys  Argan SA

Pay attention - limited upside

The 3 months correlation between Mercialys and Argan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mercialys SA and Argan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argan SA and Mercialys 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 Mercialys SA 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 Mercialys i.e., Mercialys and Argan SA go up and down completely randomly.

Pair Corralation between Mercialys and Argan SA

If you would invest (100.00) in Argan SA on September 14, 2024 and sell it today you would earn a total of  100.00  from holding Argan SA or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Mercialys SA  vs.  Argan SA

Mercialys SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercialys 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.

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 somewhat strong technical and fundamental indicators, Argan SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mercialys and Argan SA

The main advantage of trading using opposite Mercialys and Argan SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercialys 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 Mercialys SA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.