Correlation Between AIB Group and MAROC TELECOM
Can any of the company-specific risk be diversified away by investing in both AIB Group and MAROC TELECOM 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 AIB Group and MAROC TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIB Group plc and MAROC TELECOM, you can compare the effects of market volatilities on AIB Group and MAROC TELECOM 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 AIB Group with a short position of MAROC TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIB Group and MAROC TELECOM.
Diversification Opportunities for AIB Group and MAROC TELECOM
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AIB and MAROC is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding AIB Group plc and MAROC TELECOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAROC TELECOM and AIB Group 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 AIB Group plc are associated (or correlated) with MAROC TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAROC TELECOM has no effect on the direction of AIB Group i.e., AIB Group and MAROC TELECOM go up and down completely randomly.
Pair Corralation between AIB Group and MAROC TELECOM
Assuming the 90 days trading horizon AIB Group plc is expected to under-perform the MAROC TELECOM. In addition to that, AIB Group is 2.19 times more volatile than MAROC TELECOM. It trades about -0.15 of its total potential returns per unit of risk. MAROC TELECOM is currently generating about 0.11 per unit of volatility. If you would invest 765.00 in MAROC TELECOM on September 21, 2024 and sell it today you would earn a total of 10.00 from holding MAROC TELECOM or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
AIB Group plc vs. MAROC TELECOM
Performance |
| Timeline |
| AIB Group plc |
| MAROC TELECOM |
AIB Group and MAROC TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIB Group and MAROC TELECOM
The main advantage of trading using opposite AIB Group and MAROC TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIB Group position performs unexpectedly, MAROC TELECOM 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 MAROC TELECOM will offset losses from the drop in MAROC TELECOM's long position.| AIB Group vs. GRIFFIN MINING LTD | AIB Group vs. MAROC TELECOM | AIB Group vs. COMBA TELECOM SYST | AIB Group vs. Perseus Mining Limited |
Check out your portfolio center.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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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