Correlation Between El Ahli and Speed Medical

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

Diversification Opportunities for El Ahli and Speed Medical

0.15

Correlation Coefficient

El Ahli  Speed Medical

Average diversification

The 3 months correlation between AFDI and Speed is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding El Ahli Investment and Speed Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Speed Medical 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 Speed Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Speed Medical has no effect on the direction of El Ahli i.e., El Ahli and Speed Medical go up and down completely randomly.

Pair Corralation between El Ahli and Speed Medical

Assuming the 90 days trading horizon El Ahli Investment is expected to under-perform the Speed Medical. But the stock apears to be less risky and, when comparing its historical volatility, El Ahli Investment is 1.07 times less risky than Speed Medical. The stock trades about -0.02 of its potential returns per unit of risk. The Speed Medical is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Speed Medical on September 17, 2024 and sell it today you would earn a total of  1.00  from holding Speed Medical or generate 2.7% return on investment over 90 days.

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

El Ahli Investment  vs.  Speed Medical

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.

Speed Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Speed Medical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Speed Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with El Ahli and Speed Medical

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

The idea behind El Ahli Investment and Speed Medical 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.