Correlation Between Sunway Construction and Al Aqar

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

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

Diversification Opportunities for Sunway Construction and Al Aqar

0.43

Correlation Coefficient

Sunway Construction  Al Aqar

Very weak diversification

The 3 months correlation between Sunway and 5116 is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sunway Construction Group and Al Aqar Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Aqar Healthcare and Sunway Construction 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 Sunway Construction Group are associated (or correlated) with Al Aqar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Aqar Healthcare has no effect on the direction of Sunway Construction i.e., Sunway Construction and Al Aqar go up and down completely randomly.

Pair Corralation between Sunway Construction and Al Aqar

Assuming the 90 days trading horizon Sunway Construction Group is expected to generate 2.52 times more return on investment than Al Aqar. However, Sunway Construction is 2.52 times more volatile than Al Aqar Healthcare. It trades about 0.1 of its potential returns per unit of risk. Al Aqar Healthcare is currently generating about 0.01 per unit of risk. If you would invest  153.00  in Sunway Construction Group on December 2, 2024 and sell it today you would earn a total of  277.00  from holding Sunway Construction Group or generate 181.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Sunway Construction Group  vs.  Al Aqar Healthcare

Sunway Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunway Construction Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Sunway Construction is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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.

Pair Trading with Sunway Construction and Al Aqar

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

The idea behind Sunway Construction Group and Al Aqar Healthcare 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.