Correlation Between BANK OF AFRICA and AGMA LAHLOU

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

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

Diversification Opportunities for BANK OF AFRICA and AGMA LAHLOU

-0.39

Correlation Coefficient

BANK OF AFRICA  AGMA LAHLOU

Very good diversification

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

Pair Corralation between BANK OF AFRICA and AGMA LAHLOU

Assuming the 90 days trading horizon BANK OF AFRICA is expected to under-perform the AGMA LAHLOU. In addition to that, BANK OF AFRICA is 1.01 times more volatile than AGMA LAHLOU TAZI. It trades about -0.02 of its total potential returns per unit of risk. AGMA LAHLOU TAZI is currently generating about 0.02 per unit of volatility. 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

BANK OF AFRICA  vs.  AGMA LAHLOU TAZI

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.

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.

Pair Trading with BANK OF AFRICA and AGMA LAHLOU

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

The idea behind BANK OF AFRICA and AGMA LAHLOU TAZI 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.