Correlation Between B Investments and Al Tawfeek

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

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

Diversification Opportunities for B Investments and Al Tawfeek

0.5

Correlation Coefficient

B Investments  Al Tawfeek

Very weak diversification

The 3 months correlation between BINV and ATLC is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding B Investments Holding and Al Tawfeek Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Tawfeek Leasing and B Investments 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 B Investments Holding are associated (or correlated) with Al Tawfeek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Tawfeek Leasing has no effect on the direction of B Investments i.e., B Investments and Al Tawfeek go up and down completely randomly.

Pair Corralation between B Investments and Al Tawfeek

Assuming the 90 days trading horizon B Investments Holding is expected to generate 0.51 times more return on investment than Al Tawfeek. However, B Investments Holding is 1.96 times less risky than Al Tawfeek. It trades about 0.11 of its potential returns per unit of risk. Al Tawfeek Leasing is currently generating about -0.01 per unit of risk. If you would invest  2,296  in B Investments Holding on October 9, 2024 and sell it today you would earn a total of  188.00  from holding B Investments Holding or generate 8.19% return on investment over 90 days.

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

B Investments Holding  vs.  Al Tawfeek Leasing

B Investments Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in B Investments Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, B Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with B Investments and Al Tawfeek

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

The idea behind B Investments Holding and Al Tawfeek Leasing 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.