Correlation Between Arab Moltaka and Qatar Natl

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

Diversification Opportunities for Arab Moltaka and Qatar Natl

0.84

Correlation Coefficient

Arab Moltaka  Qatar Natl

Very poor diversification

The 3 months correlation between Arab and Qatar is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Arab Moltaka Investments and Qatar Natl Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qatar Natl Bank 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 Qatar Natl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qatar Natl Bank has no effect on the direction of Arab Moltaka i.e., Arab Moltaka and Qatar Natl go up and down completely randomly.

Pair Corralation between Arab Moltaka and Qatar Natl

Assuming the 90 days trading horizon Arab Moltaka Investments is expected to generate 1.4 times more return on investment than Qatar Natl. However, Arab Moltaka is 1.4 times more volatile than Qatar Natl Bank. It trades about -0.04 of its potential returns per unit of risk. Qatar Natl Bank is currently generating about -0.08 per unit of risk. If you would invest  278.00  in Arab Moltaka Investments on September 15, 2024 and sell it today you would lose (6.00) from holding Arab Moltaka Investments or give up 2.16% of portfolio value over 90 days.

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

Arab Moltaka Investments  vs.  Qatar Natl Bank

Arab Moltaka Investments

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arab Moltaka Investments are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Arab Moltaka reported solid returns over the last few months and may actually be approaching a breakup point.

Qatar Natl Bank

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qatar Natl Bank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Qatar Natl reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arab Moltaka and Qatar Natl

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

The idea behind Arab Moltaka Investments and Qatar Natl Bank 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.