Correlation Between MAROC LEASING and MAGHREB OXYGENE

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

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

Diversification Opportunities for MAROC LEASING and MAGHREB OXYGENE

0.39

Correlation Coefficient

MAROC LEASING  MAGHREB OXYGENE

Weak diversification

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

Pair Corralation between MAROC LEASING and MAGHREB OXYGENE

Assuming the 90 days trading horizon MAROC LEASING is expected to generate 5.72 times less return on investment than MAGHREB OXYGENE. But when comparing it to its historical volatility, MAROC LEASING is 2.7 times less risky than MAGHREB OXYGENE. It trades about 0.05 of its potential returns per unit of risk. MAGHREB OXYGENE is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  21,600  in MAGHREB OXYGENE on September 12, 2024 and sell it today you would earn a total of  3,900  from holding MAGHREB OXYGENE or generate 18.06% return on investment over 90 days.

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

MAROC LEASING  vs.  MAGHREB OXYGENE

MAROC LEASING

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MAROC LEASING are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, MAROC LEASING is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

MAGHREB OXYGENE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MAGHREB OXYGENE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, MAGHREB OXYGENE sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAROC LEASING and MAGHREB OXYGENE

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

The idea behind MAROC LEASING and MAGHREB OXYGENE 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.

Check out your portfolio center.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.