Correlation Between Argo Investments and Resolute Mining

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

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

Diversification Opportunities for Argo Investments and Resolute Mining

-0.3

Correlation Coefficient

Argo Investments  Resolute Mining

Very good diversification

The 3 months correlation between Argo and Resolute is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Argo Investments and Resolute Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resolute Mining and Argo Investments 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 Argo Investments are associated (or correlated) with Resolute Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resolute Mining has no effect on the direction of Argo Investments i.e., Argo Investments and Resolute Mining go up and down completely randomly.

Pair Corralation between Argo Investments and Resolute Mining

Assuming the 90 days trading horizon Argo Investments is expected to generate 0.16 times more return on investment than Resolute Mining. However, Argo Investments is 6.29 times less risky than Resolute Mining. It trades about 0.01 of its potential returns per unit of risk. Resolute Mining is currently generating about -0.03 per unit of risk. If you would invest  905.00  in Argo Investments on December 4, 2024 and sell it today you would earn a total of  1.00  from holding Argo Investments or generate 0.11% return on investment over 90 days.

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

Argo Investments  vs.  Resolute Mining

Argo Investments

Risk-Adjusted Performance

Very Weak

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

Resolute Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Resolute Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Argo Investments and Resolute Mining

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

The idea behind Argo Investments and Resolute Mining 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.