Correlation Between MAROC TELECOM and PT Ace

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

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

Diversification Opportunities for MAROC TELECOM and PT Ace

0.41

Correlation Coefficient

MAROC TELECOM  PT Ace

Very weak diversification

The 3 months correlation between MAROC and 4AH1 is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding MAROC TELECOM and PT Ace Hardware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Ace Hardware and MAROC TELECOM 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 TELECOM are associated (or correlated) with PT Ace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Ace Hardware has no effect on the direction of MAROC TELECOM i.e., MAROC TELECOM and PT Ace go up and down completely randomly.

Pair Corralation between MAROC TELECOM and PT Ace

Assuming the 90 days trading horizon MAROC TELECOM is expected to under-perform the PT Ace. But the stock apears to be less risky and, when comparing its historical volatility, MAROC TELECOM is 8.66 times less risky than PT Ace. The stock trades about -0.05 of its potential returns per unit of risk. The PT Ace Hardware is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.30  in PT Ace Hardware on December 28, 2024 and sell it today you would lose (1.30) from holding PT Ace Hardware or give up 30.23% of portfolio value over 90 days.

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

MAROC TELECOM  vs.  PT Ace Hardware

MAROC TELECOM

Risk-Adjusted Performance

Very Weak

Over the last 90 days MAROC TELECOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, MAROC TELECOM is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

PT Ace Hardware

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Ace Hardware are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, PT Ace reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAROC TELECOM and PT Ace

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

The idea behind MAROC TELECOM and PT Ace Hardware 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 Global Correlations module to find global opportunities by holding instruments from different markets.