Correlation Between TGCC SA and ATTIJARIWAFA BANK

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

By analyzing existing cross correlation between TGCC SA and ATTIJARIWAFA BANK, you can compare the effects of market volatilities on TGCC SA and ATTIJARIWAFA BANK 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 TGCC SA with a short position of ATTIJARIWAFA BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of TGCC SA and ATTIJARIWAFA BANK.

Diversification Opportunities for TGCC SA and ATTIJARIWAFA BANK

0.88

Correlation Coefficient

TGCC SA  ATTIJARIWAFA BANK

Very poor diversification

The 3 months correlation between TGCC and ATTIJARIWAFA is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding TGCC SA and ATTIJARIWAFA BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATTIJARIWAFA BANK and TGCC SA 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 TGCC SA are associated (or correlated) with ATTIJARIWAFA BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATTIJARIWAFA BANK has no effect on the direction of TGCC SA i.e., TGCC SA and ATTIJARIWAFA BANK go up and down completely randomly.

Pair Corralation between TGCC SA and ATTIJARIWAFA BANK

Assuming the 90 days trading horizon TGCC SA is expected to generate 1.33 times more return on investment than ATTIJARIWAFA BANK. However, TGCC SA is 1.33 times more volatile than ATTIJARIWAFA BANK. It trades about 0.21 of its potential returns per unit of risk. ATTIJARIWAFA BANK is currently generating about 0.08 per unit of risk. If you would invest  37,490  in TGCC SA on September 13, 2024 and sell it today you would earn a total of  9,510  from holding TGCC SA or generate 25.37% return on investment over 90 days.

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

TGCC SA  vs.  ATTIJARIWAFA BANK

TGCC SA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TGCC SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, TGCC SA exhibited solid returns over the last few months and may actually be approaching a breakup point.

ATTIJARIWAFA BANK

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATTIJARIWAFA BANK are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, ATTIJARIWAFA BANK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TGCC SA and ATTIJARIWAFA BANK

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

The idea behind TGCC SA and ATTIJARIWAFA BANK 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.