Correlation Between Nozha International and Arabia Investments

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

By analyzing existing cross correlation between Nozha International Hospital and Arabia Investments Holding, you can compare the effects of market volatilities on Nozha International and Arabia Investments 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 Nozha International with a short position of Arabia Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nozha International and Arabia Investments.

Diversification Opportunities for Nozha International and Arabia Investments

0.11

Correlation Coefficient

Nozha International  Arabia Investments

Average diversification

The 3 months correlation between Nozha and Arabia is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nozha International Hospital and Arabia Investments Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arabia Investments and Nozha International 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 Nozha International Hospital are associated (or correlated) with Arabia Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arabia Investments has no effect on the direction of Nozha International i.e., Nozha International and Arabia Investments go up and down completely randomly.

Pair Corralation between Nozha International and Arabia Investments

Assuming the 90 days trading horizon Nozha International Hospital is expected to under-perform the Arabia Investments. In addition to that, Nozha International is 1.76 times more volatile than Arabia Investments Holding. It trades about -0.1 of its total potential returns per unit of risk. Arabia Investments Holding is currently generating about 0.01 per unit of volatility. If you would invest  51.00  in Arabia Investments Holding on October 20, 2024 and sell it today you would earn a total of  0.00  from holding Arabia Investments Holding or generate 0.0% return on investment over 90 days.

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

Nozha International Hospital  vs.  Arabia Investments Holding

Nozha International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nozha International Hospital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Nozha International reported solid returns over the last few months and may actually be approaching a breakup point.

Arabia Investments

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arabia Investments Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Arabia Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nozha International and Arabia Investments

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

The idea behind Nozha International Hospital and Arabia Investments Holding 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.