Correlation Between Argent Minerals and Industrias Penoles

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

By analyzing existing cross correlation between Argent Minerals Limited and Industrias Penoles Sab, you can compare the effects of market volatilities on Argent Minerals and Industrias Penoles 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 Argent Minerals with a short position of Industrias Penoles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argent Minerals and Industrias Penoles.

Diversification Opportunities for Argent Minerals and Industrias Penoles

0.37

Correlation Coefficient

Argent Minerals  Industrias Penoles

Weak diversification

The 3 months correlation between Argent and Industrias is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Argent Minerals Limited and Industrias Penoles Sab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrias Penoles Sab and Argent Minerals 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 Argent Minerals Limited are associated (or correlated) with Industrias Penoles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrias Penoles Sab has no effect on the direction of Argent Minerals i.e., Argent Minerals and Industrias Penoles go up and down completely randomly.

Pair Corralation between Argent Minerals and Industrias Penoles

Assuming the 90 days horizon Argent Minerals Limited is expected to generate 11.7 times more return on investment than Industrias Penoles. However, Argent Minerals is 11.7 times more volatile than Industrias Penoles Sab. It trades about 0.05 of its potential returns per unit of risk. Industrias Penoles Sab is currently generating about 0.02 per unit of risk. If you would invest  1.50  in Argent Minerals Limited on September 1, 2024 and sell it today you would earn a total of  2.50  from holding Argent Minerals Limited or generate 166.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Argent Minerals Limited  vs.  Industrias Penoles Sab

Argent Minerals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Argent Minerals Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Argent Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Industrias Penoles Sab

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrias Penoles Sab are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Industrias Penoles reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Argent Minerals and Industrias Penoles

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

The idea behind Argent Minerals Limited and Industrias Penoles Sab 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.