Correlation Between Asiri Surgical and Nations Trust

Can any of the company-specific risk be diversified away by investing in both Asiri Surgical and Nations Trust 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 Asiri Surgical and Nations Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asiri Surgical Hospital and Nations Trust Bank, you can compare the effects of market volatilities on Asiri Surgical and Nations Trust 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 Asiri Surgical with a short position of Nations Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asiri Surgical and Nations Trust.

Diversification Opportunities for Asiri Surgical and Nations Trust

0.63

Correlation Coefficient

Asiri Surgical  Nations Trust

Poor diversification

The 3 months correlation between Asiri and Nations is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Asiri Surgical Hospital and Nations Trust Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nations Trust Bank and Asiri Surgical 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 Asiri Surgical Hospital are associated (or correlated) with Nations Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nations Trust Bank has no effect on the direction of Asiri Surgical i.e., Asiri Surgical and Nations Trust go up and down completely randomly.

Pair Corralation between Asiri Surgical and Nations Trust

Assuming the 90 days trading horizon Asiri Surgical Hospital is expected to under-perform the Nations Trust. In addition to that, Asiri Surgical is 1.17 times more volatile than Nations Trust Bank. It trades about -0.03 of its total potential returns per unit of risk. Nations Trust Bank is currently generating about 0.1 per unit of volatility. If you would invest  17,650  in Nations Trust Bank on December 26, 2024 and sell it today you would earn a total of  1,675  from holding Nations Trust Bank or generate 9.49% return on investment over 90 days.

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

Asiri Surgical Hospital  vs.  Nations Trust Bank

Asiri Surgical Hospital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asiri Surgical Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Asiri Surgical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nations Trust Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nations Trust Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nations Trust may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Asiri Surgical and Nations Trust

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

The idea behind Asiri Surgical Hospital and Nations Trust Bank 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.