Correlation Between Argan and Acorn Energy

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

By analyzing existing cross correlation between Argan Inc and Acorn Energy, you can compare the effects of market volatilities on Argan and Acorn Energy 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 Argan with a short position of Acorn Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argan and Acorn Energy.

Diversification Opportunities for Argan and Acorn Energy

0.29

Correlation Coefficient

Argan  Acorn Energy

Modest diversification

The 3 months correlation between Argan and Acorn is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Argan Inc and Acorn Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acorn Energy and Argan 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 Argan Inc are associated (or correlated) with Acorn Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acorn Energy has no effect on the direction of Argan i.e., Argan and Acorn Energy go up and down completely randomly.

Pair Corralation between Argan and Acorn Energy

If you would invest  4,960  in Argan Inc on January 26, 2024 and sell it today you would earn a total of  1,161  from holding Argan Inc or generate 23.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Argan Inc  vs.  Acorn Energy

Argan Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Argan Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Argan showed solid returns over the last few months and may actually be approaching a breakup point.

Acorn Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acorn Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Argan and Acorn Energy

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

The idea behind Argan Inc and Acorn Energy 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..