Correlation Between Natural Gas and Al Arafa

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

By analyzing existing cross correlation between Natural Gas Mining and Al Arafa Investment, you can compare the effects of market volatilities on Natural Gas and Al Arafa 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 Natural Gas with a short position of Al Arafa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Gas and Al Arafa.

Diversification Opportunities for Natural Gas and Al Arafa

0.0

Correlation Coefficient

Natural Gas  Al Arafa

Pay attention - limited upside

The 3 months correlation between Natural and AIVCB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Natural Gas Mining and Al Arafa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Arafa Investment and Natural Gas 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 Natural Gas Mining are associated (or correlated) with Al Arafa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Arafa Investment has no effect on the direction of Natural Gas i.e., Natural Gas and Al Arafa go up and down completely randomly.

Pair Corralation between Natural Gas and Al Arafa

If you would invest  4,190  in Natural Gas Mining on October 10, 2024 and sell it today you would earn a total of  15.00  from holding Natural Gas Mining or generate 0.36% return on investment over 90 days.

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

Natural Gas Mining  vs.  Al Arafa Investment

Natural Gas Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Gas Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Al Arafa Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Al Arafa Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Al Arafa is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Natural Gas and Al Arafa

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

The idea behind Natural Gas Mining and Al Arafa Investment 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.