Correlation Between Energy Absolute and Rojana Industrial

Can any of the company-specific risk be diversified away by investing in both Energy Absolute and Rojana Industrial 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 Energy Absolute and Rojana Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Energy Absolute Public and Rojana Industrial Park, you can compare the effects of market volatilities on Energy Absolute and Rojana Industrial 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 Energy Absolute with a short position of Rojana Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Absolute and Rojana Industrial.

Diversification Opportunities for Energy Absolute and Rojana Industrial

0.39

Correlation Coefficient

Energy Absolute  Rojana Industrial

Weak diversification

The 3 months correlation between Energy and Rojana is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Energy Absolute Public and Rojana Industrial Park in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rojana Industrial Park and Energy Absolute 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 Energy Absolute Public are associated (or correlated) with Rojana Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rojana Industrial Park has no effect on the direction of Energy Absolute i.e., Energy Absolute and Rojana Industrial go up and down completely randomly.

Pair Corralation between Energy Absolute and Rojana Industrial

Assuming the 90 days horizon Energy Absolute Public is expected to generate 2.52 times more return on investment than Rojana Industrial. However, Energy Absolute is 2.52 times more volatile than Rojana Industrial Park. It trades about 0.04 of its potential returns per unit of risk. Rojana Industrial Park is currently generating about 0.06 per unit of risk. If you would invest  610.00  in Energy Absolute Public on September 3, 2024 and sell it today you would earn a total of  25.00  from holding Energy Absolute Public or generate 4.1% return on investment over 90 days.

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

Energy Absolute Public  vs.  Rojana Industrial Park

Energy Absolute Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Absolute Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Energy Absolute disclosed solid returns over the last few months and may actually be approaching a breakup point.

Rojana Industrial Park

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rojana Industrial Park are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Rojana Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Energy Absolute and Rojana Industrial

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

The idea behind Energy Absolute Public and Rojana Industrial Park 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.