Correlation Between Neptune Digital and Argo Blockchain

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

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

Diversification Opportunities for Neptune Digital and Argo Blockchain

0.31

Correlation Coefficient

Neptune Digital  Argo Blockchain

Weak diversification

The 3 months correlation between Neptune and Argo is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Neptune Digital Assets and Argo Blockchain PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Blockchain PLC and Neptune Digital 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 Neptune Digital Assets are associated (or correlated) with Argo Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Blockchain PLC has no effect on the direction of Neptune Digital i.e., Neptune Digital and Argo Blockchain go up and down completely randomly.

Pair Corralation between Neptune Digital and Argo Blockchain

Assuming the 90 days horizon Neptune Digital Assets is expected to generate 2.36 times more return on investment than Argo Blockchain. However, Neptune Digital is 2.36 times more volatile than Argo Blockchain PLC. It trades about 0.18 of its potential returns per unit of risk. Argo Blockchain PLC is currently generating about -0.02 per unit of risk. If you would invest  19.00  in Neptune Digital Assets on September 4, 2024 and sell it today you would earn a total of  39.00  from holding Neptune Digital Assets or generate 205.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Neptune Digital Assets  vs.  Argo Blockchain PLC

Neptune Digital Assets

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neptune Digital Assets are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Neptune Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Argo Blockchain PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argo Blockchain PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Neptune Digital and Argo Blockchain

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

The idea behind Neptune Digital Assets and Argo Blockchain 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.