Correlation Between Argan and Dirtt Environmen

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

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

Diversification Opportunities for Argan and Dirtt Environmen

-0.4

Correlation Coefficient

Argan  Dirtt Environmen

Very good diversification

The 3 months correlation between Argan and Dirtt is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Argan Inc and Dirtt Environmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dirtt Environmen and Argan 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 Argan Inc are associated (or correlated) with Dirtt Environmen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dirtt Environmen has no effect on the direction of Argan i.e., Argan and Dirtt Environmen go up and down completely randomly.

Pair Corralation between Argan and Dirtt Environmen

If you would invest  5,876  in Argan Inc on October 12, 2024 and sell it today you would earn a total of  9,691  from holding Argan Inc or generate 164.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.53%
Values	Daily Returns

Argan Inc  vs.  Dirtt Environmen

Argan Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Argan Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Argan showed solid returns over the last few months and may actually be approaching a breakup point.

Dirtt Environmen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dirtt Environmen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dirtt Environmen is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Argan and Dirtt Environmen

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

The idea behind Argan Inc and Dirtt Environmen 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.