Correlation Between Argent and Brait SE

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

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

Diversification Opportunities for Argent and Brait SE

0.45

Correlation Coefficient

Argent  Brait SE

Very weak diversification

The 3 months correlation between Argent and Brait is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Argent and Brait SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brait SE and Argent 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 are associated (or correlated) with Brait SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brait SE has no effect on the direction of Argent i.e., Argent and Brait SE go up and down completely randomly.

Pair Corralation between Argent and Brait SE

Assuming the 90 days trading horizon Argent is expected to under-perform the Brait SE. In addition to that, Argent is 1.0 times more volatile than Brait SE. It trades about -0.09 of its total potential returns per unit of risk. Brait SE is currently generating about 0.02 per unit of volatility. If you would invest  20,000  in Brait SE on December 27, 2024 and sell it today you would earn a total of  200.00  from holding Brait SE or generate 1.0% return on investment over 90 days.

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

Argent  vs.  Brait SE

Argent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Argent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Brait SE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brait SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Brait SE is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Argent and Brait SE

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

The idea behind Argent and Brait SE 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.