Correlation Between Sofina Socit and Argen X

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

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

Diversification Opportunities for Sofina Socit and Argen X

-0.62

Correlation Coefficient

Sofina Socit  Argen X

Excellent diversification

The 3 months correlation between Sofina and Argen is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Argen X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argen X and Sofina Socit 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 Sofina Socit Anonyme are associated (or correlated) with Argen X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argen X has no effect on the direction of Sofina Socit i.e., Sofina Socit and Argen X go up and down completely randomly.

Pair Corralation between Sofina Socit and Argen X

Assuming the 90 days trading horizon Sofina Socit is expected to generate 33.66 times less return on investment than Argen X. In addition to that, Sofina Socit is 1.04 times more volatile than Argen X. It trades about 0.01 of its total potential returns per unit of risk. Argen X is currently generating about 0.22 per unit of volatility. If you would invest  46,490  in Argen X on August 31, 2024 and sell it today you would earn a total of  12,590  from holding Argen X or generate 27.08% return on investment over 90 days.

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

Sofina Socit Anonyme  vs.  Argen X

Sofina Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofina Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Sofina Socit is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Argen X

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Argen X are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Argen X reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sofina Socit and Argen X

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

The idea behind Sofina Socit Anonyme and Argen X 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.