Correlation Between Al Aqar and Cloudpoint Technology

Can any of the company-specific risk be diversified away by investing in both Al Aqar and Cloudpoint 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 Cloudpoint 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 Cloudpoint Technology Berhad, you can compare the effects of market volatilities on Al Aqar and Cloudpoint 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 Cloudpoint Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Aqar and Cloudpoint Technology.

Diversification Opportunities for Al Aqar and Cloudpoint Technology

0.63

Correlation Coefficient

Al Aqar  Cloudpoint Technology

Poor diversification

The 3 months correlation between 5116 and Cloudpoint is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Al Aqar Healthcare and Cloudpoint Technology Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudpoint Technology 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 Cloudpoint Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudpoint Technology has no effect on the direction of Al Aqar i.e., Al Aqar and Cloudpoint Technology go up and down completely randomly.

Pair Corralation between Al Aqar and Cloudpoint Technology

Assuming the 90 days trading horizon Al Aqar Healthcare is expected to generate 0.27 times more return on investment than Cloudpoint Technology. However, Al Aqar Healthcare is 3.71 times less risky than Cloudpoint Technology. It trades about -0.08 of its potential returns per unit of risk. Cloudpoint Technology Berhad is currently generating about -0.05 per unit of risk. If you would invest  132.00  in Al Aqar Healthcare on December 25, 2024 and sell it today you would lose (6.00) from holding Al Aqar Healthcare or give up 4.55% of portfolio value over 90 days.

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

Al Aqar Healthcare  vs.  Cloudpoint Technology Berhad

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 quite persistent basic indicators, Al Aqar is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Cloudpoint Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cloudpoint Technology Berhad 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.

Pair Trading with Al Aqar and Cloudpoint Technology

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

The idea behind Al Aqar Healthcare and Cloudpoint Technology Berhad 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.