Correlation Between Argent and Naspers

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

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

Diversification Opportunities for Argent and Naspers

0.26

Correlation Coefficient

Argent  Naspers

Modest diversification

The 3 months correlation between Argent and Naspers is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Argent and Naspers Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naspers Limited 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 Naspers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naspers Limited has no effect on the direction of Argent i.e., Argent and Naspers go up and down completely randomly.

Pair Corralation between Argent and Naspers

Assuming the 90 days trading horizon Argent is expected to generate 0.97 times more return on investment than Naspers. However, Argent is 1.03 times less risky than Naspers. It trades about 0.15 of its potential returns per unit of risk. Naspers Limited is currently generating about 0.08 per unit of risk. If you would invest  150,100  in Argent on September 24, 2024 and sell it today you would earn a total of  124,600  from holding Argent or generate 83.01% return on investment over 90 days.

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

Argent  vs.  Naspers Limited

Argent

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Argent are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Argent is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Naspers Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Naspers Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Naspers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Argent and Naspers

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

The idea behind Argent and Naspers 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.