Correlation Between Al Khair and JS Global

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

By analyzing existing cross correlation between Al Khair Gadoon Limited and JS Global Banking, you can compare the effects of market volatilities on Al Khair and JS Global 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 Khair with a short position of JS Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Khair and JS Global.

Diversification Opportunities for Al Khair and JS Global

0.61

Correlation Coefficient

Al Khair  JS Global

Poor diversification

The 3 months correlation between AKGL and JSGBETF is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Al Khair Gadoon Limited and JS Global Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Global Banking and Al Khair 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 Khair Gadoon Limited are associated (or correlated) with JS Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Global Banking has no effect on the direction of Al Khair i.e., Al Khair and JS Global go up and down completely randomly.

Pair Corralation between Al Khair and JS Global

Assuming the 90 days trading horizon Al Khair Gadoon Limited is expected to generate 1.43 times more return on investment than JS Global. However, Al Khair is 1.43 times more volatile than JS Global Banking. It trades about 0.17 of its potential returns per unit of risk. JS Global Banking is currently generating about 0.17 per unit of risk. If you would invest  3,400  in Al Khair Gadoon Limited on October 6, 2024 and sell it today you would earn a total of  745.00  from holding Al Khair Gadoon Limited or generate 21.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	70.0%
Values	Daily Returns

Al Khair Gadoon Limited  vs.  JS Global Banking

Al Khair Gadoon

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Al Khair Gadoon Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Al Khair sustained solid returns over the last few months and may actually be approaching a breakup point.

JS Global Banking

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JS Global Banking are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, JS Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Al Khair and JS Global

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

The idea behind Al Khair Gadoon Limited and JS Global Banking 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.