Correlation Between Air Link and Bank Al

Can any of the company-specific risk be diversified away by investing in both Air Link and Bank Al 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 Air Link and Bank Al into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Link Communication and Bank Al Habib, you can compare the effects of market volatilities on Air Link and Bank Al 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 Air Link with a short position of Bank Al. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Link and Bank Al.

Diversification Opportunities for Air Link and Bank Al

-0.71

Correlation Coefficient

Air Link  Bank Al

Pay attention - limited upside

The 3 months correlation between Air and Bank is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Air Link Communication and Bank Al Habib in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Al Habib and Air Link 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 Air Link Communication are associated (or correlated) with Bank Al. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Al Habib has no effect on the direction of Air Link i.e., Air Link and Bank Al go up and down completely randomly.

Pair Corralation between Air Link and Bank Al

Assuming the 90 days trading horizon Air Link Communication is expected to under-perform the Bank Al. In addition to that, Air Link is 1.28 times more volatile than Bank Al Habib. It trades about -0.11 of its total potential returns per unit of risk. Bank Al Habib is currently generating about 0.15 per unit of volatility. If you would invest  12,302  in Bank Al Habib on December 21, 2024 and sell it today you would earn a total of  1,961  from holding Bank Al Habib or generate 15.94% return on investment over 90 days.

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

Air Link Communication  vs.  Bank Al Habib

Air Link Communication

Risk-Adjusted Performance

Very Weak

Over the last 90 days Air Link Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bank Al Habib

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Al Habib are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bank Al sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Link and Bank Al

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

The idea behind Air Link Communication and Bank Al Habib 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.