Correlation Between El Ahli and Mohandes Insurance

Can any of the company-specific risk be diversified away by investing in both El Ahli and Mohandes Insurance 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 El Ahli and Mohandes Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between El Ahli Investment and Mohandes Insurance, you can compare the effects of market volatilities on El Ahli and Mohandes Insurance 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 El Ahli with a short position of Mohandes Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Ahli and Mohandes Insurance.

Diversification Opportunities for El Ahli and Mohandes Insurance

0.23

Correlation Coefficient

El Ahli  Mohandes Insurance

Modest diversification

The 3 months correlation between AFDI and Mohandes is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding El Ahli Investment and Mohandes Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mohandes Insurance and El Ahli 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 El Ahli Investment are associated (or correlated) with Mohandes Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mohandes Insurance has no effect on the direction of El Ahli i.e., El Ahli and Mohandes Insurance go up and down completely randomly.

Pair Corralation between El Ahli and Mohandes Insurance

Assuming the 90 days trading horizon El Ahli is expected to generate 2.36 times less return on investment than Mohandes Insurance. In addition to that, El Ahli is 1.03 times more volatile than Mohandes Insurance. It trades about 0.06 of its total potential returns per unit of risk. Mohandes Insurance is currently generating about 0.15 per unit of volatility. If you would invest  1,712  in Mohandes Insurance on September 15, 2024 and sell it today you would earn a total of  850.00  from holding Mohandes Insurance or generate 49.65% return on investment over 90 days.

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

El Ahli Investment  vs.  Mohandes Insurance

El Ahli Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days El Ahli Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, El Ahli is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Mohandes Insurance

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mohandes Insurance are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Mohandes Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with El Ahli and Mohandes Insurance

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

The idea behind El Ahli Investment and Mohandes Insurance 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.