Correlation Between Al Khair and Grand Investment

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

By analyzing existing cross correlation between Al Khair River and Grand Investment Capital, you can compare the effects of market volatilities on Al Khair and Grand Investment 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 Al Khair with a short position of Grand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Khair and Grand Investment.

Diversification Opportunities for Al Khair and Grand Investment

-0.07

Correlation Coefficient

Al Khair  Grand Investment

Good diversification

The 3 months correlation between KRDI and Grand is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Al Khair River and Grand Investment Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Investment Capital and Al Khair 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 Al Khair River are associated (or correlated) with Grand Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Investment Capital has no effect on the direction of Al Khair i.e., Al Khair and Grand Investment go up and down completely randomly.

Pair Corralation between Al Khair and Grand Investment

Assuming the 90 days trading horizon Al Khair River is expected to generate 0.82 times more return on investment than Grand Investment. However, Al Khair River is 1.22 times less risky than Grand Investment. It trades about 0.08 of its potential returns per unit of risk. Grand Investment Capital is currently generating about -0.11 per unit of risk. If you would invest  52.00  in Al Khair River on September 15, 2024 and sell it today you would earn a total of  5.00  from holding Al Khair River or generate 9.62% return on investment over 90 days.

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

Al Khair River  vs.  Grand Investment Capital

Al Khair River

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Al Khair River are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Al Khair reported solid returns over the last few months and may actually be approaching a breakup point.

Grand Investment Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Investment Capital 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Al Khair and Grand Investment

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

The idea behind Al Khair River and Grand Investment Capital 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.