Correlation Between Al Aqar and JF Technology

Can any of the company-specific risk be diversified away by investing in both Al Aqar and JF Technology 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 Al Aqar and JF Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Al Aqar Healthcare and JF Technology BHD, you can compare the effects of market volatilities on Al Aqar and JF Technology 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 Al Aqar with a short position of JF Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Aqar and JF Technology.

Diversification Opportunities for Al Aqar and JF Technology

0.83

Correlation Coefficient

Al Aqar  JF Technology

Very poor diversification

The 3 months correlation between 5116 and 0146 is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Al Aqar Healthcare and JF Technology BHD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JF Technology BHD and Al Aqar 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 Al Aqar Healthcare are associated (or correlated) with JF Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JF Technology BHD has no effect on the direction of Al Aqar i.e., Al Aqar and JF Technology go up and down completely randomly.

Pair Corralation between Al Aqar and JF Technology

Assuming the 90 days trading horizon Al Aqar Healthcare is expected to generate 0.32 times more return on investment than JF Technology. However, Al Aqar Healthcare is 3.11 times less risky than JF Technology. It trades about -0.11 of its potential returns per unit of risk. JF Technology BHD is currently generating about -0.25 per unit of risk. If you would invest  132.00  in Al Aqar Healthcare on December 28, 2024 and sell it today you would lose (8.00) from holding Al Aqar Healthcare or give up 6.06% of portfolio value over 90 days.

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

Al Aqar Healthcare  vs.  JF Technology BHD

Al Aqar Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Al Aqar Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

JF Technology BHD

Risk-Adjusted Performance

Very Weak

Over the last 90 days JF Technology BHD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Al Aqar and JF Technology

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

The idea behind Al Aqar Healthcare and JF Technology BHD 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.