Correlation Between Copper For and Al Khair

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

By analyzing existing cross correlation between Copper For Commercial and Al Khair River, you can compare the effects of market volatilities on Copper For and Al Khair 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 Copper For with a short position of Al Khair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copper For and Al Khair.

Diversification Opportunities for Copper For and Al Khair

-0.11

Correlation Coefficient

Copper For  Al Khair

Good diversification

The 3 months correlation between Copper and KRDI is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Copper For Commercial and Al Khair River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Khair River and Copper For 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 Copper For Commercial are associated (or correlated) with Al Khair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Khair River has no effect on the direction of Copper For i.e., Copper For and Al Khair go up and down completely randomly.

Pair Corralation between Copper For and Al Khair

Assuming the 90 days trading horizon Copper For Commercial is expected to under-perform the Al Khair. In addition to that, Copper For is 1.43 times more volatile than Al Khair River. It trades about -0.02 of its total potential returns per unit of risk. Al Khair River is currently generating about 0.08 per unit of volatility. If you would invest  52.00  in Al Khair River on September 15, 2024 and sell it today you would earn a total of  5.00  from holding Al Khair River or generate 9.62% return on investment over 90 days.

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

Copper For Commercial  vs.  Al Khair River

Copper For Commercial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Al Khair River

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Al Khair River are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Al Khair reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Copper For and Al Khair

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

The idea behind Copper For Commercial and Al Khair River 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.