Correlation Between Global Telecom and Arab Dairy

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

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

Diversification Opportunities for Global Telecom and Arab Dairy

0.0

Correlation Coefficient

Global Telecom  Arab Dairy

Pay attention - limited upside

The 3 months correlation between Global and Arab is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Global Telecom Holding and The Arab Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arab Dairy and Global Telecom 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 Telecom Holding are associated (or correlated) with Arab Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arab Dairy has no effect on the direction of Global Telecom i.e., Global Telecom and Arab Dairy go up and down completely randomly.

Pair Corralation between Global Telecom and Arab Dairy

If you would invest  282.00  in The Arab Dairy on September 16, 2024 and sell it today you would earn a total of  49.00  from holding The Arab Dairy or generate 17.38% return on investment over 90 days.

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

Global Telecom Holding  vs.  The Arab Dairy

Global Telecom Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Telecom Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Global Telecom is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Arab Dairy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Arab Dairy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Arab Dairy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Telecom and Arab Dairy

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

The idea behind Global Telecom Holding and The Arab Dairy 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.