Correlation Between Natural Gas and Qatar Natl

Can any of the company-specific risk be diversified away by investing in both Natural Gas 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 Natural Gas and Qatar Natl 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 Qatar Natl Bank, you can compare the effects of market volatilities on Natural Gas 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 Natural Gas with a short position of Qatar Natl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Gas and Qatar Natl.

Diversification Opportunities for Natural Gas and Qatar Natl

0.11

Correlation Coefficient

Natural Gas  Qatar Natl

Average diversification

The 3 months correlation between Natural and Qatar is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Natural Gas Mining 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 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 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 Natural Gas i.e., Natural Gas and Qatar Natl go up and down completely randomly.

Pair Corralation between Natural Gas and Qatar Natl

Assuming the 90 days trading horizon Natural Gas Mining is expected to generate 1.67 times more return on investment than Qatar Natl. However, Natural Gas is 1.67 times more volatile than Qatar Natl Bank. It trades about -0.04 of its potential returns per unit of risk. Qatar Natl Bank is currently generating about -0.11 per unit of risk. If you would invest  4,181  in Natural Gas Mining on December 4, 2024 and sell it today you would lose (241.00) from holding Natural Gas Mining or give up 5.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.0%
Values	Daily Returns

Natural Gas Mining  vs.  Qatar Natl Bank

Natural Gas Mining

Risk-Adjusted Performance

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 nearly stable technical and fundamental indicators, Natural Gas 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

Very Weak

Over the last 90 days Qatar Natl Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Natural Gas and Qatar Natl

The main advantage of trading using opposite Natural Gas and Qatar Natl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Gas 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 Natural Gas Mining 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.