Correlation Between MAROC TELECOM and Aqua America

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

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

Diversification Opportunities for MAROC TELECOM and Aqua America

-0.11

Correlation Coefficient

MAROC TELECOM  Aqua America

Good diversification

The 3 months correlation between MAROC and Aqua is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding MAROC TELECOM and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America 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 Aqua America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua America has no effect on the direction of MAROC TELECOM i.e., MAROC TELECOM and Aqua America go up and down completely randomly.

Pair Corralation between MAROC TELECOM and Aqua America

Assuming the 90 days trading horizon MAROC TELECOM is expected to generate 3.16 times more return on investment than Aqua America. However, MAROC TELECOM is 3.16 times more volatile than Aqua America. It trades about 0.05 of its potential returns per unit of risk. Aqua America is currently generating about -0.02 per unit of risk. If you would invest  337.00  in MAROC TELECOM on October 4, 2024 and sell it today you would earn a total of  443.00  from holding MAROC TELECOM or generate 131.45% return on investment over 90 days.

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

MAROC TELECOM  vs.  Aqua America

MAROC TELECOM

Risk-Adjusted Performance

0 of 100

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Aqua America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aqua America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aqua America is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MAROC TELECOM and Aqua America

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

The idea behind MAROC TELECOM and Aqua America 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.