Correlation Between Gecina SA and Argan SA

Can any of the company-specific risk be diversified away by investing in both Gecina 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 Gecina 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 Gecina SA and Argan SA, you can compare the effects of market volatilities on Gecina 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 Gecina SA with a short position of Argan SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gecina SA and Argan SA.

Diversification Opportunities for Gecina SA and Argan SA

0.3

Correlation Coefficient

Gecina SA  Argan SA

Weak diversification

The 3 months correlation between Gecina and Argan is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gecina SA and Argan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argan SA and Gecina 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 Gecina 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 Gecina SA i.e., Gecina SA and Argan SA go up and down completely randomly.

Pair Corralation between Gecina SA and Argan SA

Assuming the 90 days trading horizon Gecina SA is expected to under-perform the Argan SA. But the stock apears to be less risky and, when comparing its historical volatility, Gecina SA is 1.12 times less risky than Argan SA. The stock trades about -0.01 of its potential returns per unit of risk. The Argan SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,686  in Argan SA on December 27, 2024 and sell it today you would earn a total of  404.00  from holding Argan SA or generate 7.11% return on investment over 90 days.

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

Gecina SA  vs.  Argan SA

Gecina SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gecina SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Gecina 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

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Argan SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Argan SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gecina SA and Argan SA

The main advantage of trading using opposite Gecina SA and Argan SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gecina 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 Gecina 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.