Correlation Between Aben Resources and Argo Gold

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

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

Diversification Opportunities for Aben Resources and Argo Gold

0.24

Correlation Coefficient

Aben Resources  Argo Gold

Modest diversification

The 3 months correlation between Aben and Argo is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Aben Resources and Argo Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Gold and Aben Resources 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 Aben Resources are associated (or correlated) with Argo Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Gold has no effect on the direction of Aben Resources i.e., Aben Resources and Argo Gold go up and down completely randomly.

Pair Corralation between Aben Resources and Argo Gold

Assuming the 90 days horizon Aben Resources is expected to under-perform the Argo Gold. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aben Resources is 1.02 times less risky than Argo Gold. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Argo Gold is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5.58  in Argo Gold on October 10, 2024 and sell it today you would earn a total of  0.37  from holding Argo Gold or generate 6.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Aben Resources  vs.  Argo Gold

Aben Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aben Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Argo Gold

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Argo Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aben Resources and Argo Gold

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

The idea behind Aben Resources and Argo Gold 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.