Correlation Between Al Arafa and Saudi Egyptian

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

By analyzing existing cross correlation between Al Arafa Investment and Saudi Egyptian Investment, you can compare the effects of market volatilities on Al Arafa and Saudi Egyptian 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 Al Arafa with a short position of Saudi Egyptian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Arafa and Saudi Egyptian.

Diversification Opportunities for Al Arafa and Saudi Egyptian

0.0

Correlation Coefficient

Al Arafa  Saudi Egyptian

Pay attention - limited upside

The 3 months correlation between AIVCB and Saudi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Al Arafa Investment and Saudi Egyptian Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saudi Egyptian Investment and Al Arafa 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 Al Arafa Investment are associated (or correlated) with Saudi Egyptian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saudi Egyptian Investment has no effect on the direction of Al Arafa i.e., Al Arafa and Saudi Egyptian go up and down completely randomly.

Pair Corralation between Al Arafa and Saudi Egyptian

If you would invest  6,200  in Saudi Egyptian Investment on December 30, 2024 and sell it today you would earn a total of  94.00  from holding Saudi Egyptian Investment or generate 1.52% return on investment over 90 days.

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

Al Arafa Investment  vs.  Saudi Egyptian Investment

Al Arafa Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Al Arafa Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Al Arafa is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Saudi Egyptian Investment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Saudi Egyptian Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Saudi Egyptian may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Al Arafa and Saudi Egyptian

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

The idea behind Al Arafa Investment and Saudi Egyptian 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.