Correlation Between Al Aqar and Sapura Industrial

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

Diversification Opportunities for Al Aqar and Sapura Industrial

0.06

Correlation Coefficient

Al Aqar  Sapura Industrial

Significant diversification

The 3 months correlation between 5116 and Sapura is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Al Aqar Healthcare and Sapura Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapura Industrial 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 Sapura Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapura Industrial Bhd has no effect on the direction of Al Aqar i.e., Al Aqar and Sapura Industrial go up and down completely randomly.

Pair Corralation between Al Aqar and Sapura Industrial

Assuming the 90 days trading horizon Al Aqar is expected to generate 15.66 times less return on investment than Sapura Industrial. But when comparing it to its historical volatility, Al Aqar Healthcare is 2.05 times less risky than Sapura Industrial. It trades about 0.0 of its potential returns per unit of risk. Sapura Industrial Bhd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Sapura Industrial Bhd on December 4, 2024 and sell it today you would earn a total of  5.00  from holding Sapura Industrial Bhd or generate 6.25% return on investment over 90 days.

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

Al Aqar Healthcare  vs.  Sapura Industrial 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 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.

Sapura Industrial Bhd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sapura Industrial Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Sapura Industrial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Al Aqar and Sapura Industrial

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

The idea behind Al Aqar Healthcare and Sapura Industrial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.