Correlation Between Life Healthcare and Argent
Can any of the company-specific risk be diversified away by investing in both Life Healthcare and Argent 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 Life Healthcare and Argent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Healthcare and Argent, you can compare the effects of market volatilities on Life Healthcare and Argent 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 Life Healthcare with a short position of Argent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Healthcare and Argent.
Diversification Opportunities for Life Healthcare and Argent
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Life and Argent is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Life Healthcare and Argent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argent and Life Healthcare 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 Life Healthcare are associated (or correlated) with Argent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argent has no effect on the direction of Life Healthcare i.e., Life Healthcare and Argent go up and down completely randomly.
Pair Corralation between Life Healthcare and Argent
Assuming the 90 days trading horizon Life Healthcare is expected to under-perform the Argent. In addition to that, Life Healthcare is 1.12 times more volatile than Argent. It trades about -0.4 of its total potential returns per unit of risk. Argent is currently generating about 0.01 per unit of volatility. If you would invest 265,000 in Argent on October 12, 2024 and sell it today you would earn a total of 0.00 from holding Argent or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 94.74% |
Values | Daily Returns |
Life Healthcare vs. Argent
Performance |
Timeline |
Life Healthcare |
Argent |
Life Healthcare and Argent Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Life Healthcare and Argent
The main advantage of trading using opposite Life Healthcare and Argent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Healthcare position performs unexpectedly, Argent 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 Argent will offset losses from the drop in Argent's long position.Life Healthcare vs. Astoria Investments | Life Healthcare vs. Reinet Investments SCA | Life Healthcare vs. Trematon Capital Investments | Life Healthcare vs. Deneb Investments |
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Check out your portfolio center.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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