Correlation Between Electra Real and Argo Properties

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

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

Diversification Opportunities for Electra Real and Argo Properties

0.35

Correlation Coefficient

Electra Real  Argo Properties

Weak diversification

The 3 months correlation between Electra and Argo is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Electra Real Estate 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 Electra Real 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 Electra Real Estate 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 Electra Real i.e., Electra Real and Argo Properties go up and down completely randomly.

Pair Corralation between Electra Real and Argo Properties

Assuming the 90 days trading horizon Electra Real is expected to generate 2.52 times less return on investment than Argo Properties. In addition to that, Electra Real is 1.21 times more volatile than Argo Properties NV. It trades about 0.01 of its total potential returns per unit of risk. Argo Properties NV is currently generating about 0.03 per unit of volatility. If you would invest  990,100  in Argo Properties NV on December 30, 2024 and sell it today you would earn a total of  21,900  from holding Argo Properties NV or generate 2.21% return on investment over 90 days.

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

Electra Real Estate  vs.  Argo Properties NV

Electra Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electra Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Electra Real is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Argo Properties NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Properties NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Argo Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Electra Real and Argo Properties

The main advantage of trading using opposite Electra Real and Argo Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Real 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 Electra Real Estate 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.