Correlation Between Global Knafaim and Knafaim

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

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

Diversification Opportunities for Global Knafaim and Knafaim

0.43

Correlation Coefficient

Global Knafaim  Knafaim

Very weak diversification

The 3 months correlation between Global and Knafaim is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Global Knafaim Leasing and Knafaim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knafaim and Global Knafaim 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 Global Knafaim Leasing are associated (or correlated) with Knafaim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knafaim has no effect on the direction of Global Knafaim i.e., Global Knafaim and Knafaim go up and down completely randomly.

Pair Corralation between Global Knafaim and Knafaim

Assuming the 90 days trading horizon Global Knafaim is expected to generate 14.03 times less return on investment than Knafaim. But when comparing it to its historical volatility, Global Knafaim Leasing is 1.45 times less risky than Knafaim. It trades about 0.01 of its potential returns per unit of risk. Knafaim is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  144,000  in Knafaim on December 30, 2024 and sell it today you would earn a total of  14,900  from holding Knafaim or generate 10.35% return on investment over 90 days.

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

Global Knafaim Leasing  vs.  Knafaim

Global Knafaim Leasing

Risk-Adjusted Performance

Very Weak

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

Knafaim

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Knafaim are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Knafaim sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Knafaim and Knafaim

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

The idea behind Global Knafaim Leasing and Knafaim 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.