Correlation Between Faisal Islamic and Obour Land

Can any of the company-specific risk be diversified away by investing in both Faisal Islamic and Obour Land 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 Faisal Islamic and Obour Land into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Faisal Islamic Bank and Obour Land For, you can compare the effects of market volatilities on Faisal Islamic and Obour Land 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 Faisal Islamic with a short position of Obour Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faisal Islamic and Obour Land.

Diversification Opportunities for Faisal Islamic and Obour Land

0.56

Correlation Coefficient

Faisal Islamic  Obour Land

Very weak diversification

The 3 months correlation between Faisal and Obour is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Faisal Islamic Bank and Obour Land For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obour Land For and Faisal Islamic 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 Faisal Islamic Bank are associated (or correlated) with Obour Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obour Land For has no effect on the direction of Faisal Islamic i.e., Faisal Islamic and Obour Land go up and down completely randomly.

Pair Corralation between Faisal Islamic and Obour Land

Assuming the 90 days trading horizon Faisal Islamic Bank is expected to under-perform the Obour Land. But the stock apears to be less risky and, when comparing its historical volatility, Faisal Islamic Bank is 1.75 times less risky than Obour Land. The stock trades about -0.18 of its potential returns per unit of risk. The Obour Land For is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,831  in Obour Land For on October 11, 2024 and sell it today you would lose (33.00) from holding Obour Land For or give up 1.8% of portfolio value over 90 days.

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

Faisal Islamic Bank  vs.  Obour Land For

Faisal Islamic Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Faisal Islamic Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Faisal Islamic reported solid returns over the last few months and may actually be approaching a breakup point.

Obour Land For

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Obour Land For are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Obour Land reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Faisal Islamic and Obour Land

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

The idea behind Faisal Islamic Bank and Obour Land For 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 CEOs Directory module to screen CEOs from public companies around the world.