Correlation Between Ardentec and Century Iron

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

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

Diversification Opportunities for Ardentec and Century Iron

0.8

Correlation Coefficient

Ardentec  Century Iron

Very poor diversification

The 3 months correlation between Ardentec and Century is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ardentec and Century Iron And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Iron And and Ardentec 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 Ardentec are associated (or correlated) with Century Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Iron And has no effect on the direction of Ardentec i.e., Ardentec and Century Iron go up and down completely randomly.

Pair Corralation between Ardentec and Century Iron

Assuming the 90 days trading horizon Ardentec is expected to generate 0.95 times more return on investment than Century Iron. However, Ardentec is 1.05 times less risky than Century Iron. It trades about 0.03 of its potential returns per unit of risk. Century Iron And is currently generating about -0.18 per unit of risk. If you would invest  5,520  in Ardentec on October 5, 2024 and sell it today you would earn a total of  50.00  from holding Ardentec or generate 0.91% return on investment over 90 days.

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

Ardentec  vs.  Century Iron And

Ardentec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardentec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ardentec is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Century Iron And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century Iron And has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ardentec and Century Iron

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

The idea behind Ardentec and Century Iron And 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.