Correlation Between Al Tawfeek and Qatar Natl

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

By analyzing existing cross correlation between Al Tawfeek Leasing and Qatar Natl Bank, you can compare the effects of market volatilities on Al Tawfeek and Qatar Natl 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 Tawfeek with a short position of Qatar Natl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Tawfeek and Qatar Natl.

Diversification Opportunities for Al Tawfeek and Qatar Natl

0.49

Correlation Coefficient

Al Tawfeek  Qatar Natl

Very weak diversification

The 3 months correlation between ATLC and Qatar is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Al Tawfeek Leasing and Qatar Natl Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qatar Natl Bank and Al Tawfeek 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 Tawfeek Leasing are associated (or correlated) with Qatar Natl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qatar Natl Bank has no effect on the direction of Al Tawfeek i.e., Al Tawfeek and Qatar Natl go up and down completely randomly.

Pair Corralation between Al Tawfeek and Qatar Natl

Assuming the 90 days trading horizon Al Tawfeek Leasing is expected to under-perform the Qatar Natl. In addition to that, Al Tawfeek is 1.64 times more volatile than Qatar Natl Bank. It trades about -0.03 of its total potential returns per unit of risk. Qatar Natl Bank is currently generating about 0.08 per unit of volatility. If you would invest  2,994  in Qatar Natl Bank on October 20, 2024 and sell it today you would earn a total of  206.00  from holding Qatar Natl Bank or generate 6.88% return on investment over 90 days.

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

Al Tawfeek Leasing  vs.  Qatar Natl Bank

Al Tawfeek Leasing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Al Tawfeek Leasing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Al Tawfeek is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Qatar Natl Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Qatar Natl Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Qatar Natl may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Al Tawfeek and Qatar Natl

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

The idea behind Al Tawfeek Leasing and Qatar Natl 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.