Correlation Between MICRODATA and MAGHREBAIL

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

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

Diversification Opportunities for MICRODATA and MAGHREBAIL

0.14

Correlation Coefficient

MICRODATA  MAGHREBAIL

Average diversification

The 3 months correlation between MICRODATA and MAGHREBAIL is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding MICRODATA and MAGHREBAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGHREBAIL 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 MAGHREBAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGHREBAIL has no effect on the direction of MICRODATA i.e., MICRODATA and MAGHREBAIL go up and down completely randomly.

Pair Corralation between MICRODATA and MAGHREBAIL

Assuming the 90 days trading horizon MICRODATA is expected to generate 117.66 times less return on investment than MAGHREBAIL. But when comparing it to its historical volatility, MICRODATA is 47.52 times less risky than MAGHREBAIL. It trades about 0.03 of its potential returns per unit of risk. MAGHREBAIL is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  95,000  in MAGHREBAIL on September 15, 2024 and sell it today you would lose (2,200) from holding MAGHREBAIL or give up 2.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.51%
Values	Daily Returns

MICRODATA  vs.  MAGHREBAIL

MICRODATA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MICRODATA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, MICRODATA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MAGHREBAIL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAGHREBAIL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, MAGHREBAIL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MICRODATA and MAGHREBAIL

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

The idea behind MICRODATA and MAGHREBAIL 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.