Correlation Between AFRIQUIA GAZ and MICRODATA

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

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

Diversification Opportunities for AFRIQUIA GAZ and MICRODATA

-0.28

Correlation Coefficient

AFRIQUIA GAZ  MICRODATA

Very good diversification

The 3 months correlation between AFRIQUIA and MICRODATA is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding AFRIQUIA GAZ and MICRODATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MICRODATA and AFRIQUIA GAZ 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 AFRIQUIA GAZ are associated (or correlated) with MICRODATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MICRODATA has no effect on the direction of AFRIQUIA GAZ i.e., AFRIQUIA GAZ and MICRODATA go up and down completely randomly.

Pair Corralation between AFRIQUIA GAZ and MICRODATA

Assuming the 90 days trading horizon AFRIQUIA GAZ is expected to under-perform the MICRODATA. But the stock apears to be less risky and, when comparing its historical volatility, AFRIQUIA GAZ is 2.32 times less risky than MICRODATA. The stock trades about -0.01 of its potential returns per unit of risk. The MICRODATA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  64,000  in MICRODATA on September 15, 2024 and sell it today you would earn a total of  0.00  from holding MICRODATA or generate 0.0% return on investment over 90 days.

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

AFRIQUIA GAZ  vs.  MICRODATA

AFRIQUIA GAZ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFRIQUIA GAZ has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, AFRIQUIA GAZ is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

MICRODATA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MICRODATA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, MICRODATA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AFRIQUIA GAZ and MICRODATA

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

The idea behind AFRIQUIA GAZ and MICRODATA 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.