Correlation Between Gadwa For and Export Development

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

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

Diversification Opportunities for Gadwa For and Export Development

-0.33

Correlation Coefficient

Gadwa For  Export Development

Very good diversification

The 3 months correlation between Gadwa and Export is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Gadwa For Industrial and Export Development Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Export Development Bank and Gadwa For 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 Gadwa For Industrial are associated (or correlated) with Export Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Export Development Bank has no effect on the direction of Gadwa For i.e., Gadwa For and Export Development go up and down completely randomly.

Pair Corralation between Gadwa For and Export Development

Assuming the 90 days trading horizon Gadwa For Industrial is expected to under-perform the Export Development. But the stock apears to be less risky and, when comparing its historical volatility, Gadwa For Industrial is 1.33 times less risky than Export Development. The stock trades about -0.19 of its potential returns per unit of risk. The Export Development Bank is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,522  in Export Development Bank on October 11, 2024 and sell it today you would earn a total of  235.00  from holding Export Development Bank or generate 15.44% return on investment over 90 days.

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

Gadwa For Industrial  vs.  Export Development Bank

Gadwa For Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gadwa For Industrial 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.

Export Development Bank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Export Development Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Export Development reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gadwa For and Export Development

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

The idea behind Gadwa For Industrial and Export Development 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.