Correlation Between MAROC TELECOM and Münchener Rück

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

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

Diversification Opportunities for MAROC TELECOM and Münchener Rück

-0.5

Correlation Coefficient

MAROC TELECOM  Münchener Rück

Very good diversification

The 3 months correlation between MAROC and Münchener is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding MAROC TELECOM and Mnchener Rck AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mnchener Rck AG 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 Münchener Rück. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mnchener Rck AG has no effect on the direction of MAROC TELECOM i.e., MAROC TELECOM and Münchener Rück go up and down completely randomly.

Pair Corralation between MAROC TELECOM and Münchener Rück

Assuming the 90 days trading horizon MAROC TELECOM is expected to under-perform the Münchener Rück. In addition to that, MAROC TELECOM is 1.4 times more volatile than Mnchener Rck AG. It trades about -0.05 of its total potential returns per unit of risk. Mnchener Rck AG is currently generating about 0.25 per unit of volatility. If you would invest  48,680  in Mnchener Rck AG on December 28, 2024 and sell it today you would earn a total of  9,820  from holding Mnchener Rck AG or generate 20.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

MAROC TELECOM  vs.  Mnchener Rck AG

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.

Mnchener Rck AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mnchener Rck AG are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Münchener Rück reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAROC TELECOM and Münchener Rück

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

The idea behind MAROC TELECOM and Mnchener Rck AG 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.