Correlation Between Knafaim and Global Knafaim

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

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

Diversification Opportunities for Knafaim and Global Knafaim

0.95

Correlation Coefficient

Knafaim  Global Knafaim

Almost no diversification

The 3 months correlation between Knafaim and Global is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Knafaim and Global Knafaim Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Knafaim Leasing and 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 Knafaim are associated (or correlated) with Global Knafaim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Knafaim Leasing has no effect on the direction of Knafaim i.e., Knafaim and Global Knafaim go up and down completely randomly.

Pair Corralation between Knafaim and Global Knafaim

Assuming the 90 days trading horizon Knafaim is expected to generate 1.48 times more return on investment than Global Knafaim. However, Knafaim is 1.48 times more volatile than Global Knafaim Leasing. It trades about 0.12 of its potential returns per unit of risk. Global Knafaim Leasing is currently generating about 0.16 per unit of risk. If you would invest  103,700  in Knafaim on September 3, 2024 and sell it today you would earn a total of  33,800  from holding Knafaim or generate 32.59% return on investment over 90 days.

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

Knafaim  vs.  Global Knafaim Leasing

Knafaim

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Knafaim are ranked lower than 13 (%) 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.

Global Knafaim Leasing

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Knafaim Leasing are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Global Knafaim sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Knafaim and Global Knafaim

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

The idea behind Knafaim and Global Knafaim Leasing 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.