Correlation Between Arab Moltaka and Gadwa For

Can any of the company-specific risk be diversified away by investing in both Arab Moltaka and Gadwa For 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 Arab Moltaka and Gadwa For into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arab Moltaka Investments and Gadwa For Industrial, you can compare the effects of market volatilities on Arab Moltaka and Gadwa For 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 Arab Moltaka with a short position of Gadwa For. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arab Moltaka and Gadwa For.

Diversification Opportunities for Arab Moltaka and Gadwa For

0.29

Correlation Coefficient

Arab Moltaka  Gadwa For

Modest diversification

The 3 months correlation between Arab and Gadwa is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Arab Moltaka Investments and Gadwa For Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gadwa For Industrial and Arab Moltaka 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 Arab Moltaka Investments are associated (or correlated) with Gadwa For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gadwa For Industrial has no effect on the direction of Arab Moltaka i.e., Arab Moltaka and Gadwa For go up and down completely randomly.

Pair Corralation between Arab Moltaka and Gadwa For

Assuming the 90 days trading horizon Arab Moltaka is expected to generate 3.04 times less return on investment than Gadwa For. But when comparing it to its historical volatility, Arab Moltaka Investments is 1.12 times less risky than Gadwa For. It trades about 0.05 of its potential returns per unit of risk. Gadwa For Industrial is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  87.00  in Gadwa For Industrial on October 26, 2024 and sell it today you would earn a total of  378.00  from holding Gadwa For Industrial or generate 434.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	81.04%
Values	Daily Returns

Arab Moltaka Investments  vs.  Gadwa For Industrial

Arab Moltaka Investments

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gadwa For Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gadwa For Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Arab Moltaka and Gadwa For

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

The idea behind Arab Moltaka Investments and Gadwa For Industrial 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.