Correlation Between Al Bad and Amanet Management

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

By analyzing existing cross correlation between Al Bad Massuot Yitzhak and Amanet Management Systems, you can compare the effects of market volatilities on Al Bad and Amanet Management 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 Bad with a short position of Amanet Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Bad and Amanet Management.

Diversification Opportunities for Al Bad and Amanet Management

0.45

Correlation Coefficient

Al Bad  Amanet Management

Very weak diversification

The 3 months correlation between ALBA and Amanet is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Al Bad Massuot Yitzhak and Amanet Management Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amanet Management Systems and Al Bad 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 Bad Massuot Yitzhak are associated (or correlated) with Amanet Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amanet Management Systems has no effect on the direction of Al Bad i.e., Al Bad and Amanet Management go up and down completely randomly.

Pair Corralation between Al Bad and Amanet Management

Assuming the 90 days trading horizon Al Bad Massuot Yitzhak is expected to generate 1.65 times more return on investment than Amanet Management. However, Al Bad is 1.65 times more volatile than Amanet Management Systems. It trades about 0.28 of its potential returns per unit of risk. Amanet Management Systems is currently generating about 0.07 per unit of risk. If you would invest  141,600  in Al Bad Massuot Yitzhak on August 31, 2024 and sell it today you would earn a total of  52,700  from holding Al Bad Massuot Yitzhak or generate 37.22% return on investment over 90 days.

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

Al Bad Massuot Yitzhak  vs.  Amanet Management Systems

Al Bad Massuot

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Al Bad Massuot Yitzhak are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Al Bad sustained solid returns over the last few months and may actually be approaching a breakup point.

Amanet Management Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amanet Management Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amanet Management may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Al Bad and Amanet Management

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

The idea behind Al Bad Massuot Yitzhak and Amanet Management Systems 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.