Correlation Between MICRODATA and MAGHREB OXYGENE

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

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

Diversification Opportunities for MICRODATA and MAGHREB OXYGENE

0.76

Correlation Coefficient

MICRODATA  MAGHREB OXYGENE

Poor diversification

The 3 months correlation between MICRODATA and MAGHREB is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MICRODATA and MAGHREB OXYGENE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGHREB OXYGENE and MICRODATA 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 MICRODATA 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 MICRODATA i.e., MICRODATA and MAGHREB OXYGENE go up and down completely randomly.

Pair Corralation between MICRODATA and MAGHREB OXYGENE

Assuming the 90 days trading horizon MICRODATA is expected to generate 3.25 times less return on investment than MAGHREB OXYGENE. But when comparing it to its historical volatility, MICRODATA is 1.64 times less risky than MAGHREB OXYGENE. It trades about 0.12 of its potential returns per unit of risk. MAGHREB OXYGENE is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  25,000  in MAGHREB OXYGENE on December 3, 2024 and sell it today you would earn a total of  19,000  from holding MAGHREB OXYGENE or generate 76.0% return on investment over 90 days.

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

MICRODATA  vs.  MAGHREB OXYGENE

MICRODATA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MICRODATA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, MICRODATA sustained solid returns over the last few months and may actually be approaching a breakup point.

MAGHREB OXYGENE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MAGHREB OXYGENE are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady 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 MICRODATA and MAGHREB OXYGENE

The main advantage of trading using opposite MICRODATA and MAGHREB OXYGENE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MICRODATA 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 MICRODATA 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.