Correlation Between Argan and Founder Group

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

By analyzing existing cross correlation between Argan Inc and Founder Group Limited, you can compare the effects of market volatilities on Argan and Founder Group 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 Founder Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argan and Founder Group.

Diversification Opportunities for Argan and Founder Group

0.6

Correlation Coefficient

Argan  Founder Group

Poor diversification

The 3 months correlation between Argan and Founder is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Argan Inc and Founder Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Founder Group Limited 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 Founder Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Founder Group Limited has no effect on the direction of Argan i.e., Argan and Founder Group go up and down completely randomly.

Pair Corralation between Argan and Founder Group

Considering the 90-day investment horizon Argan Inc is expected to generate 0.77 times more return on investment than Founder Group. However, Argan Inc is 1.29 times less risky than Founder Group. It trades about -0.05 of its potential returns per unit of risk. Founder Group Limited is currently generating about -0.04 per unit of risk. If you would invest  14,266  in Argan Inc on December 27, 2024 and sell it today you would lose (2,743) from holding Argan Inc or give up 19.23% of portfolio value over 90 days.

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

Argan Inc  vs.  Founder Group Limited

Argan Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Argan Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Founder Group Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Founder Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Argan and Founder Group

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

The idea behind Argan Inc and Founder Group Limited 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.