Correlation Between MED PAPER and MAROC LEASING

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

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

Diversification Opportunities for MED PAPER and MAROC LEASING

-0.03

Correlation Coefficient

MED PAPER  MAROC LEASING

Good diversification

The 3 months correlation between MED and MAROC is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding MED PAPER and MAROC LEASING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAROC LEASING and MED PAPER 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 MED PAPER are associated (or correlated) with MAROC LEASING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAROC LEASING has no effect on the direction of MED PAPER i.e., MED PAPER and MAROC LEASING go up and down completely randomly.

Pair Corralation between MED PAPER and MAROC LEASING

Assuming the 90 days trading horizon MED PAPER is expected to under-perform the MAROC LEASING. In addition to that, MED PAPER is 1.21 times more volatile than MAROC LEASING. It trades about -0.05 of its total potential returns per unit of risk. MAROC LEASING is currently generating about 0.07 per unit of volatility. If you would invest  37,605  in MAROC LEASING on September 5, 2024 and sell it today you would earn a total of  2,295  from holding MAROC LEASING or generate 6.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

MED PAPER  vs.  MAROC LEASING

MED PAPER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MED PAPER has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, MED PAPER is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

MAROC LEASING

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MAROC LEASING are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, MAROC LEASING may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MED PAPER and MAROC LEASING

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

The idea behind MED PAPER and MAROC LEASING 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .