Correlation Between Covivio SA and Argan SA

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

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

Diversification Opportunities for Covivio SA and Argan SA

0.85

Correlation Coefficient

Covivio SA  Argan SA

Very poor diversification

The 3 months correlation between Covivio and Argan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Covivio SA and Argan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argan SA and Covivio SA 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 Covivio SA are associated (or correlated) with Argan SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argan SA has no effect on the direction of Covivio SA i.e., Covivio SA and Argan SA go up and down completely randomly.

Pair Corralation between Covivio SA and Argan SA

Assuming the 90 days trading horizon Covivio SA is expected to generate 0.99 times more return on investment than Argan SA. However, Covivio SA is 1.01 times less risky than Argan SA. It trades about 0.01 of its potential returns per unit of risk. Argan SA is currently generating about -0.01 per unit of risk. If you would invest  5,108  in Covivio SA on December 2, 2024 and sell it today you would earn a total of  152.00  from holding Covivio SA or generate 2.98% return on investment over 90 days.

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

Covivio SA  vs.  Argan SA

Covivio SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Covivio SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Covivio SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Argan SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Argan SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Argan SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Covivio SA and Argan SA

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

The idea behind Covivio SA and Argan SA 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.