Correlation Between AGMA LAHLOU and BMCI
Can any of the company-specific risk be diversified away by investing in both AGMA LAHLOU and BMCI 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 AGMA LAHLOU and BMCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGMA LAHLOU TAZI and BMCI, you can compare the effects of market volatilities on AGMA LAHLOU and BMCI 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 AGMA LAHLOU with a short position of BMCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGMA LAHLOU and BMCI.
Diversification Opportunities for AGMA LAHLOU and BMCI
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AGMA and BMCI is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding AGMA LAHLOU TAZI and BMCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMCI and AGMA LAHLOU 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 AGMA LAHLOU TAZI are associated (or correlated) with BMCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMCI has no effect on the direction of AGMA LAHLOU i.e., AGMA LAHLOU and BMCI go up and down completely randomly.
Pair Corralation between AGMA LAHLOU and BMCI
Assuming the 90 days trading horizon AGMA LAHLOU TAZI is expected to under-perform the BMCI. But the stock apears to be less risky and, when comparing its historical volatility, AGMA LAHLOU TAZI is 1.7 times less risky than BMCI. The stock trades about -0.22 of its potential returns per unit of risk. The BMCI is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 58,730 in BMCI on August 30, 2024 and sell it today you would lose (1,740) from holding BMCI or give up 2.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
AGMA LAHLOU TAZI vs. BMCI
Performance |
| Timeline |
| AGMA LAHLOU TAZI |
| BMCI |
AGMA LAHLOU and BMCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGMA LAHLOU and BMCI
The main advantage of trading using opposite AGMA LAHLOU and BMCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGMA LAHLOU position performs unexpectedly, BMCI 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 BMCI will offset losses from the drop in BMCI's long position.The idea behind AGMA LAHLOU TAZI and BMCI 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.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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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