Correlation Between El Nasr and Qatar Natl

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

By analyzing existing cross correlation between El Nasr Clothes and Qatar Natl Bank, you can compare the effects of market volatilities on El Nasr and Qatar Natl 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 El Nasr with a short position of Qatar Natl. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Nasr and Qatar Natl.

Diversification Opportunities for El Nasr and Qatar Natl

0.49

Correlation Coefficient

El Nasr  Qatar Natl

Very weak diversification

The 3 months correlation between KABO and Qatar is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding El Nasr Clothes and Qatar Natl Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qatar Natl Bank and El Nasr 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 El Nasr Clothes are associated (or correlated) with Qatar Natl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qatar Natl Bank has no effect on the direction of El Nasr i.e., El Nasr and Qatar Natl go up and down completely randomly.

Pair Corralation between El Nasr and Qatar Natl

Assuming the 90 days trading horizon El Nasr Clothes is expected to generate 1.45 times more return on investment than Qatar Natl. However, El Nasr is 1.45 times more volatile than Qatar Natl Bank. It trades about 0.24 of its potential returns per unit of risk. Qatar Natl Bank is currently generating about 0.16 per unit of risk. If you would invest  263.00  in El Nasr Clothes on September 15, 2024 and sell it today you would earn a total of  128.00  from holding El Nasr Clothes or generate 48.67% return on investment over 90 days.

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

El Nasr Clothes  vs.  Qatar Natl Bank

El Nasr Clothes

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in El Nasr Clothes are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, El Nasr reported solid returns over the last few months and may actually be approaching a breakup point.

Qatar Natl Bank

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with El Nasr and Qatar Natl

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

The idea behind El Nasr Clothes and Qatar Natl 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 Global Correlations module to find global opportunities by holding instruments from different markets.