Correlation Between Mohandes Insurance and Al Baraka

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

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

Diversification Opportunities for Mohandes Insurance and Al Baraka

-0.25

Correlation Coefficient

Mohandes Insurance  Al Baraka

Very good diversification

The 3 months correlation between Mohandes and SAUD is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Mohandes Insurance and Al Baraka Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Baraka Bank and Mohandes Insurance 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 Mohandes Insurance are associated (or correlated) with Al Baraka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Baraka Bank has no effect on the direction of Mohandes Insurance i.e., Mohandes Insurance and Al Baraka go up and down completely randomly.

Pair Corralation between Mohandes Insurance and Al Baraka

Assuming the 90 days trading horizon Mohandes Insurance is expected to generate 2.55 times more return on investment than Al Baraka. However, Mohandes Insurance is 2.55 times more volatile than Al Baraka Bank. It trades about 0.0 of its potential returns per unit of risk. Al Baraka Bank is currently generating about -0.14 per unit of risk. If you would invest  2,472  in Mohandes Insurance on December 22, 2024 and sell it today you would lose (37.00) from holding Mohandes Insurance or give up 1.5% of portfolio value over 90 days.

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

Mohandes Insurance  vs.  Al Baraka Bank

Mohandes Insurance

Risk-Adjusted Performance

Very Weak

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

Al Baraka Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Al Baraka Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Mohandes Insurance and Al Baraka

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

The idea behind Mohandes Insurance and Al Baraka 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.