Correlation Between Al Aqar and Ho Hup

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

Diversification Opportunities for Al Aqar and Ho Hup

0.32

Correlation Coefficient

Al Aqar  Ho Hup

Weak diversification

The 3 months correlation between 5116 and 5169 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Al Aqar Healthcare and Ho Hup Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ho Hup Construction 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 Ho Hup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ho Hup Construction has no effect on the direction of Al Aqar i.e., Al Aqar and Ho Hup go up and down completely randomly.

Pair Corralation between Al Aqar and Ho Hup

Assuming the 90 days trading horizon Al Aqar Healthcare is expected to under-perform the Ho Hup. But the stock apears to be less risky and, when comparing its historical volatility, Al Aqar Healthcare is 6.88 times less risky than Ho Hup. The stock trades about -0.11 of its potential returns per unit of risk. The Ho Hup Construction is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Ho Hup Construction on December 28, 2024 and sell it today you would earn a total of  4.00  from holding Ho Hup Construction or generate 28.57% return on investment over 90 days.

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

Al Aqar Healthcare  vs.  Ho Hup Construction

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.

Ho Hup Construction

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ho Hup Construction are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Ho Hup disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Al Aqar and Ho Hup

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

The idea behind Al Aqar Healthcare and Ho Hup Construction 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.