Correlation Between Axiata Group and Al Aqar

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

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

Diversification Opportunities for Axiata Group and Al Aqar

-0.71

Correlation Coefficient

Axiata Group  Al Aqar

Pay attention - limited upside

The 3 months correlation between Axiata and 5116 is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Axiata Group Bhd 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 Axiata Group 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 Axiata Group Bhd 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 Axiata Group i.e., Axiata Group and Al Aqar go up and down completely randomly.

Pair Corralation between Axiata Group and Al Aqar

Assuming the 90 days trading horizon Axiata Group Bhd is expected to under-perform the Al Aqar. In addition to that, Axiata Group is 1.53 times more volatile than Al Aqar Healthcare. It trades about -0.09 of its total potential returns per unit of risk. Al Aqar Healthcare is currently generating about 0.14 per unit of volatility. If you would invest  130.00  in Al Aqar Healthcare on August 30, 2024 and sell it today you would earn a total of  10.00  from holding Al Aqar Healthcare or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Axiata Group Bhd  vs.  Al Aqar Healthcare

Axiata Group Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axiata Group Bhd 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.

Al Aqar Healthcare

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Al Aqar Healthcare are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Al Aqar may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Axiata Group and Al Aqar

The main advantage of trading using opposite Axiata Group and Al Aqar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axiata Group 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 Axiata Group Bhd 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.