Correlation Between Argan and Applied Digital
Can any of the company-specific risk be diversified away by investing in both Argan and Applied Digital 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 Applied Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argan Inc and Applied Digital, you can compare the effects of market volatilities on Argan and Applied Digital 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 Applied Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argan and Applied Digital.
Diversification Opportunities for Argan and Applied Digital
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Argan and Applied is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Argan Inc and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital 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 Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of Argan i.e., Argan and Applied Digital go up and down completely randomly.
Pair Corralation between Argan and Applied Digital
Considering the 90-day investment horizon Argan is expected to generate 1.87 times less return on investment than Applied Digital. But when comparing it to its historical volatility, Argan Inc is 2.74 times less risky than Applied Digital. It trades about 0.19 of its potential returns per unit of risk. Applied Digital is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 572.00 in Applied Digital on March 28, 2025 and sell it today you would earn a total of 410.00 from holding Applied Digital or generate 71.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argan Inc vs. Applied Digital
Performance |
| Timeline |
| Argan Inc |
| Applied Digital |
Argan and Applied Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argan and Applied Digital
The main advantage of trading using opposite Argan and Applied Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argan position performs unexpectedly, Applied Digital 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 Applied Digital will offset losses from the drop in Applied Digital's long position.| Argan vs. Arcosa Inc | Argan vs. Construction Partners | Argan vs. Topbuild Corp | Argan vs. Comfort Systems USA |
| Applied Digital vs. Magic Empire Global | Applied Digital vs. Zhong Yang Financial | Applied Digital vs. Netcapital | Applied Digital vs. Lazard |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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