Correlation Between Arabia Investments and Zahraa Maadi

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

Diversification Opportunities for Arabia Investments and Zahraa Maadi

-0.02

Correlation Coefficient

Arabia Investments  Zahraa Maadi

Good diversification

The 3 months correlation between Arabia and Zahraa is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Arabia Investments Holding and Zahraa Maadi Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zahraa Maadi 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 Zahraa Maadi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zahraa Maadi Investment has no effect on the direction of Arabia Investments i.e., Arabia Investments and Zahraa Maadi go up and down completely randomly.

Pair Corralation between Arabia Investments and Zahraa Maadi

Assuming the 90 days trading horizon Arabia Investments Holding is expected to generate 0.34 times more return on investment than Zahraa Maadi. However, Arabia Investments Holding is 2.96 times less risky than Zahraa Maadi. It trades about 0.01 of its potential returns per unit of risk. Zahraa Maadi Investment is currently generating about -0.17 per unit of risk. If you would invest  51.00  in Arabia Investments Holding on December 5, 2024 and sell it today you would earn a total of  0.00  from holding Arabia Investments Holding or generate 0.0% return on investment over 90 days.

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

Arabia Investments Holding  vs.  Zahraa Maadi 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.

Zahraa Maadi Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zahraa Maadi Investment 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Arabia Investments and Zahraa Maadi

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

The idea behind Arabia Investments Holding and Zahraa Maadi 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.