Correlation Between Big Shopping and Argo Properties

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

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

Diversification Opportunities for Big Shopping and Argo Properties

0.87

Correlation Coefficient

Big Shopping  Argo Properties

Very poor diversification

The 3 months correlation between Big and Argo is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Big Shopping Centers and Argo Properties NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Properties NV and Big Shopping 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 Big Shopping Centers are associated (or correlated) with Argo Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Properties NV has no effect on the direction of Big Shopping i.e., Big Shopping and Argo Properties go up and down completely randomly.

Pair Corralation between Big Shopping and Argo Properties

Assuming the 90 days trading horizon Big Shopping is expected to generate 1.06 times less return on investment than Argo Properties. But when comparing it to its historical volatility, Big Shopping Centers is 1.17 times less risky than Argo Properties. It trades about 0.3 of its potential returns per unit of risk. Argo Properties NV is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  939,800  in Argo Properties NV on September 13, 2024 and sell it today you would earn a total of  96,200  from holding Argo Properties NV or generate 10.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.74%
Values	Daily Returns

Big Shopping Centers  vs.  Argo Properties NV

Big Shopping Centers

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Big Shopping Centers are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Big Shopping sustained solid returns over the last few months and may actually be approaching a breakup point.

Argo Properties NV

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Properties NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Argo Properties sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Big Shopping and Argo Properties

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

The idea behind Big Shopping Centers and Argo Properties NV 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.