Correlation Between FIPP SA and Itissalat

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

By analyzing existing cross correlation between FIPP SA and Itissalat Al Maghrib, you can compare the effects of market volatilities on FIPP SA and Itissalat 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 FIPP SA with a short position of Itissalat. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIPP SA and Itissalat.

Diversification Opportunities for FIPP SA and Itissalat

0.17

Correlation Coefficient

FIPP SA  Itissalat

Average diversification

The 3 months correlation between FIPP and Itissalat is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding FIPP SA and Itissalat Al Maghrib in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itissalat Al Maghrib and FIPP SA 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 FIPP SA are associated (or correlated) with Itissalat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itissalat Al Maghrib has no effect on the direction of FIPP SA i.e., FIPP SA and Itissalat go up and down completely randomly.

Pair Corralation between FIPP SA and Itissalat

Assuming the 90 days trading horizon FIPP SA is expected to generate 3.11 times more return on investment than Itissalat. However, FIPP SA is 3.11 times more volatile than Itissalat Al Maghrib. It trades about 0.02 of its potential returns per unit of risk. Itissalat Al Maghrib is currently generating about 0.01 per unit of risk. If you would invest  14.00  in FIPP SA on September 26, 2024 and sell it today you would earn a total of  0.00  from holding FIPP SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.6%
Values	Daily Returns

FIPP SA  vs.  Itissalat Al Maghrib

FIPP SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FIPP SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FIPP SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Itissalat Al Maghrib

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itissalat Al Maghrib has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Itissalat is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FIPP SA and Itissalat

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

The idea behind FIPP SA and Itissalat Al Maghrib 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.