Correlation Between MAROC TELECOM and AVITA Medical

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

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

Diversification Opportunities for MAROC TELECOM and AVITA Medical

-0.45

Correlation Coefficient

MAROC TELECOM  AVITA Medical

Very good diversification

The 3 months correlation between MAROC and AVITA is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding MAROC TELECOM and AVITA Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVITA Medical 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 AVITA Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVITA Medical has no effect on the direction of MAROC TELECOM i.e., MAROC TELECOM and AVITA Medical go up and down completely randomly.

Pair Corralation between MAROC TELECOM and AVITA Medical

Assuming the 90 days trading horizon MAROC TELECOM is expected to generate 0.16 times more return on investment than AVITA Medical. However, MAROC TELECOM is 6.42 times less risky than AVITA Medical. It trades about 0.07 of its potential returns per unit of risk. AVITA Medical is currently generating about -0.08 per unit of risk. If you would invest  770.00  in MAROC TELECOM on September 27, 2024 and sell it today you would earn a total of  5.00  from holding MAROC TELECOM or generate 0.65% return on investment over 90 days.

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

MAROC TELECOM  vs.  AVITA Medical

MAROC TELECOM

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MAROC TELECOM are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

AVITA Medical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AVITA Medical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, AVITA Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAROC TELECOM and AVITA Medical

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

The idea behind MAROC TELECOM and AVITA Medical 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.