Correlation Between De Grey and Argosy Minerals

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

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

Diversification Opportunities for De Grey and Argosy Minerals

-0.63

Correlation Coefficient

De Grey  Argosy Minerals

Excellent diversification

The 3 months correlation between DEG and Argosy is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Argosy Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argosy Minerals and De Grey 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 De Grey Mining are associated (or correlated) with Argosy Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argosy Minerals has no effect on the direction of De Grey i.e., De Grey and Argosy Minerals go up and down completely randomly.

Pair Corralation between De Grey and Argosy Minerals

Assuming the 90 days trading horizon De Grey Mining is expected to generate 0.93 times more return on investment than Argosy Minerals. However, De Grey Mining is 1.08 times less risky than Argosy Minerals. It trades about 0.17 of its potential returns per unit of risk. Argosy Minerals is currently generating about -0.11 per unit of risk. If you would invest  107.00  in De Grey Mining on December 5, 2024 and sell it today you would earn a total of  94.00  from holding De Grey Mining or generate 87.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

De Grey Mining  vs.  Argosy Minerals

De Grey Mining

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in De Grey Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, De Grey may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Argosy Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Argosy Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with De Grey and Argosy Minerals

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

The idea behind De Grey Mining and Argosy Minerals 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.