Correlation Between ATTIJARIWAFA BANK and SALAFIN

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

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

Diversification Opportunities for ATTIJARIWAFA BANK and SALAFIN

-0.64

Correlation Coefficient

ATTIJARIWAFA BANK  SALAFIN

Excellent diversification

The 3 months correlation between ATTIJARIWAFA and SALAFIN is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ATTIJARIWAFA BANK and SALAFIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SALAFIN and ATTIJARIWAFA BANK 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 ATTIJARIWAFA BANK are associated (or correlated) with SALAFIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SALAFIN has no effect on the direction of ATTIJARIWAFA BANK i.e., ATTIJARIWAFA BANK and SALAFIN go up and down completely randomly.

Pair Corralation between ATTIJARIWAFA BANK and SALAFIN

Assuming the 90 days trading horizon ATTIJARIWAFA BANK is expected to generate 0.84 times more return on investment than SALAFIN. However, ATTIJARIWAFA BANK is 1.19 times less risky than SALAFIN. It trades about 0.17 of its potential returns per unit of risk. SALAFIN is currently generating about -0.05 per unit of risk. If you would invest  53,500  in ATTIJARIWAFA BANK on October 10, 2024 and sell it today you would earn a total of  7,920  from holding ATTIJARIWAFA BANK or generate 14.8% return on investment over 90 days.

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

ATTIJARIWAFA BANK  vs.  SALAFIN

ATTIJARIWAFA BANK

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATTIJARIWAFA BANK are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, ATTIJARIWAFA BANK reported solid returns over the last few months and may actually be approaching a breakup point.

SALAFIN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SALAFIN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, SALAFIN is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ATTIJARIWAFA BANK and SALAFIN

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

The idea behind ATTIJARIWAFA BANK and SALAFIN 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.