Correlation Between AGMA LAHLOU and AFRIQUIA GAZ

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

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

Diversification Opportunities for AGMA LAHLOU and AFRIQUIA GAZ

0.03

Correlation Coefficient

AGMA LAHLOU  AFRIQUIA GAZ

Significant diversification

The 3 months correlation between AGMA and AFRIQUIA is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding AGMA LAHLOU TAZI and AFRIQUIA GAZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFRIQUIA GAZ and AGMA LAHLOU 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 AGMA LAHLOU TAZI are associated (or correlated) with AFRIQUIA GAZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFRIQUIA GAZ has no effect on the direction of AGMA LAHLOU i.e., AGMA LAHLOU and AFRIQUIA GAZ go up and down completely randomly.

Pair Corralation between AGMA LAHLOU and AFRIQUIA GAZ

Assuming the 90 days trading horizon AGMA LAHLOU TAZI is expected to under-perform the AFRIQUIA GAZ. In addition to that, AGMA LAHLOU is 1.54 times more volatile than AFRIQUIA GAZ. It trades about -0.22 of its total potential returns per unit of risk. AFRIQUIA GAZ is currently generating about -0.07 per unit of volatility. If you would invest  385,000  in AFRIQUIA GAZ on September 15, 2024 and sell it today you would lose (5,000) from holding AFRIQUIA GAZ or give up 1.3% of portfolio value over 90 days.

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

AGMA LAHLOU TAZI  vs.  AFRIQUIA GAZ

AGMA LAHLOU TAZI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGMA LAHLOU TAZI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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.

Pair Trading with AGMA LAHLOU and AFRIQUIA GAZ

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

The idea behind AGMA LAHLOU TAZI and AFRIQUIA GAZ 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.