Correlation Between Arabia Investments and El Ahli

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

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

Diversification Opportunities for Arabia Investments and El Ahli

-0.01

Correlation Coefficient

Arabia Investments  El Ahli

Good diversification

The 3 months correlation between Arabia and AFDI is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Arabia Investments Holding and El Ahli Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Ahli Investment and Arabia Investments 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 Arabia Investments Holding are associated (or correlated) with El Ahli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Ahli Investment has no effect on the direction of Arabia Investments i.e., Arabia Investments and El Ahli go up and down completely randomly.

Pair Corralation between Arabia Investments and El Ahli

Assuming the 90 days trading horizon Arabia Investments Holding is expected to under-perform the El Ahli. But the stock apears to be less risky and, when comparing its historical volatility, Arabia Investments Holding is 1.05 times less risky than El Ahli. The stock trades about -0.01 of its potential returns per unit of risk. The El Ahli Investment is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,895  in El Ahli Investment on December 28, 2024 and sell it today you would lose (52.00) from holding El Ahli Investment or give up 1.8% of portfolio value over 90 days.

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

Arabia Investments Holding  vs.  El Ahli Investment

Arabia Investments

Risk-Adjusted Performance

Very Weak

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

El Ahli Investment

Risk-Adjusted Performance

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.

Pair Trading with Arabia Investments and El Ahli

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

The idea behind Arabia Investments Holding and El Ahli Investment 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.