Correlation Between AGMA LAHLOU and CFG BANK

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

Diversification Opportunities for AGMA LAHLOU and CFG BANK

-0.55

Correlation Coefficient

AGMA LAHLOU  CFG BANK

Excellent diversification

The 3 months correlation between AGMA and CFG is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding AGMA LAHLOU TAZI and CFG BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CFG BANK 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 CFG BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CFG BANK has no effect on the direction of AGMA LAHLOU i.e., AGMA LAHLOU and CFG BANK go up and down completely randomly.

Pair Corralation between AGMA LAHLOU and CFG BANK

Assuming the 90 days trading horizon AGMA LAHLOU TAZI is expected to under-perform the CFG BANK. But the stock apears to be less risky and, when comparing its historical volatility, AGMA LAHLOU TAZI is 2.12 times less risky than CFG BANK. The stock trades about -0.15 of its potential returns per unit of risk. The CFG BANK is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  17,610  in CFG BANK on September 12, 2024 and sell it today you would earn a total of  3,400  from holding CFG BANK or generate 19.31% return on investment over 90 days.

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

AGMA LAHLOU TAZI  vs.  CFG BANK

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.

CFG BANK

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with AGMA LAHLOU and CFG BANK

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

The idea behind AGMA LAHLOU TAZI and CFG BANK 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 Transaction History module to view history of all your transactions and understand their impact on performance.