Correlation Between BANK OF AFRICA and MINIERE TOUISSIT

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

Diversification Opportunities for BANK OF AFRICA and MINIERE TOUISSIT

0.23

Correlation Coefficient

BANK OF AFRICA  MINIERE TOUISSIT

Modest diversification

The 3 months correlation between BANK and MINIERE is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF AFRICA and MINIERE TOUISSIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MINIERE TOUISSIT 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 MINIERE TOUISSIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MINIERE TOUISSIT has no effect on the direction of BANK OF AFRICA i.e., BANK OF AFRICA and MINIERE TOUISSIT go up and down completely randomly.

Pair Corralation between BANK OF AFRICA and MINIERE TOUISSIT

Assuming the 90 days trading horizon BANK OF AFRICA is expected to under-perform the MINIERE TOUISSIT. But the stock apears to be less risky and, when comparing its historical volatility, BANK OF AFRICA is 3.0 times less risky than MINIERE TOUISSIT. The stock trades about -0.02 of its potential returns per unit of risk. The MINIERE TOUISSIT is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  167,200  in MINIERE TOUISSIT on September 13, 2024 and sell it today you would lose (4,700) from holding MINIERE TOUISSIT or give up 2.81% of portfolio value over 90 days.

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

BANK OF AFRICA  vs.  MINIERE TOUISSIT

BANK OF AFRICA

Risk-Adjusted Performance

0 of 100

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

MINIERE TOUISSIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MINIERE TOUISSIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MINIERE TOUISSIT 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 MINIERE TOUISSIT

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

The idea behind BANK OF AFRICA and MINIERE TOUISSIT 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.