Correlation Between Argentum and Innovative Payment

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

By analyzing existing cross correlation between Argentum 47 and Innovative Payment Solutions, you can compare the effects of market volatilities on Argentum and Innovative Payment 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 Argentum with a short position of Innovative Payment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argentum and Innovative Payment.

Diversification Opportunities for Argentum and Innovative Payment

0.61

Correlation Coefficient

Argentum  Innovative Payment

Poor diversification

The 3 months correlation between Argentum and Innovative is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Argentum 47 and Innovative Payment Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Payment and Argentum 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 Argentum 47 are associated (or correlated) with Innovative Payment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Payment has no effect on the direction of Argentum i.e., Argentum and Innovative Payment go up and down completely randomly.

Pair Corralation between Argentum and Innovative Payment

Given the investment horizon of 90 days Argentum 47 is expected to generate 1.85 times more return on investment than Innovative Payment. However, Argentum is 1.85 times more volatile than Innovative Payment Solutions. It trades about 0.04 of its potential returns per unit of risk. Innovative Payment Solutions is currently generating about -0.18 per unit of risk. If you would invest  0.89  in Argentum 47 on October 22, 2024 and sell it today you would lose (0.42) from holding Argentum 47 or give up 47.19% of portfolio value over 90 days.

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

Argentum 47  vs.  Innovative Payment Solutions

Argentum 47

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Argentum 47 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal technical and fundamental indicators, Argentum reported solid returns over the last few months and may actually be approaching a breakup point.

Innovative Payment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovative Payment Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Argentum and Innovative Payment

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

The idea behind Argentum 47 and Innovative Payment Solutions 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.