Correlation Between AGMA LAHLOU and BANK OF AFRICA

Can any of the company-specific risk be diversified away by investing in both AGMA LAHLOU and BANK OF AFRICA 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 BANK OF AFRICA 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 BANK OF AFRICA, you can compare the effects of market volatilities on AGMA LAHLOU and BANK OF AFRICA 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 BANK OF AFRICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGMA LAHLOU and BANK OF AFRICA.

Diversification Opportunities for AGMA LAHLOU and BANK OF AFRICA

-0.39

Correlation Coefficient

AGMA LAHLOU  BANK OF AFRICA

Very good diversification

The 3 months correlation between AGMA and BANK is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding AGMA LAHLOU TAZI and BANK OF AFRICA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK OF AFRICA 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 BANK OF AFRICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK OF AFRICA has no effect on the direction of AGMA LAHLOU i.e., AGMA LAHLOU and BANK OF AFRICA go up and down completely randomly.

Pair Corralation between AGMA LAHLOU and BANK OF AFRICA

Assuming the 90 days trading horizon AGMA LAHLOU TAZI is expected to generate 0.99 times more return on investment than BANK OF AFRICA. However, AGMA LAHLOU TAZI is 1.01 times less risky than BANK OF AFRICA. It trades about 0.02 of its potential returns per unit of risk. BANK OF AFRICA is currently generating about -0.02 per unit of risk. If you would invest  687,500  in AGMA LAHLOU TAZI on December 30, 2024 and sell it today you would earn a total of  12,500  from holding AGMA LAHLOU TAZI or generate 1.82% return on investment over 90 days.

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

AGMA LAHLOU TAZI  vs.  BANK OF AFRICA

AGMA LAHLOU TAZI

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AGMA LAHLOU TAZI are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, AGMA LAHLOU is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

BANK OF AFRICA

Risk-Adjusted Performance

Very Weak

Over the last 90 days BANK OF AFRICA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BANK OF AFRICA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AGMA LAHLOU and BANK OF AFRICA

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

The idea behind AGMA LAHLOU TAZI and BANK OF AFRICA 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.