Correlation Between Asiri Surgical and THE KINGSBURY

Can any of the company-specific risk be diversified away by investing in both Asiri Surgical and THE KINGSBURY 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 THE KINGSBURY 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 THE KINGSBURY PLC, you can compare the effects of market volatilities on Asiri Surgical and THE KINGSBURY 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 THE KINGSBURY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asiri Surgical and THE KINGSBURY.

Diversification Opportunities for Asiri Surgical and THE KINGSBURY

0.33

Correlation Coefficient

Asiri Surgical  THE KINGSBURY

Weak diversification

The 3 months correlation between Asiri and THE is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Asiri Surgical Hospital and THE KINGSBURY PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THE KINGSBURY PLC 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 THE KINGSBURY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THE KINGSBURY PLC has no effect on the direction of Asiri Surgical i.e., Asiri Surgical and THE KINGSBURY go up and down completely randomly.

Pair Corralation between Asiri Surgical and THE KINGSBURY

Assuming the 90 days trading horizon Asiri Surgical Hospital is expected to generate 0.8 times more return on investment than THE KINGSBURY. However, Asiri Surgical Hospital is 1.26 times less risky than THE KINGSBURY. It trades about -0.03 of its potential returns per unit of risk. THE KINGSBURY PLC is currently generating about -0.04 per unit of risk. If you would invest  1,230  in Asiri Surgical Hospital on December 25, 2024 and sell it today you would lose (60.00) from holding Asiri Surgical Hospital or give up 4.88% of portfolio value over 90 days.

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

Asiri Surgical Hospital  vs.  THE KINGSBURY PLC

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.

THE KINGSBURY PLC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Asiri Surgical and THE KINGSBURY

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

The idea behind Asiri Surgical Hospital and THE KINGSBURY PLC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.