Correlation Between Nozha International and Faisal Islamic

Can any of the company-specific risk be diversified away by investing in both Nozha International and Faisal Islamic 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 Faisal Islamic 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 Faisal Islamic Bank, you can compare the effects of market volatilities on Nozha International and Faisal Islamic 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 Faisal Islamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nozha International and Faisal Islamic.

Diversification Opportunities for Nozha International and Faisal Islamic

0.87

Correlation Coefficient

Nozha International  Faisal Islamic

Very poor diversification

The 3 months correlation between Nozha and Faisal is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nozha International Hospital and Faisal Islamic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faisal Islamic Bank 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 Faisal Islamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faisal Islamic Bank has no effect on the direction of Nozha International i.e., Nozha International and Faisal Islamic go up and down completely randomly.

Pair Corralation between Nozha International and Faisal Islamic

Assuming the 90 days trading horizon Nozha International Hospital is expected to generate 1.31 times more return on investment than Faisal Islamic. However, Nozha International is 1.31 times more volatile than Faisal Islamic Bank. It trades about 0.2 of its potential returns per unit of risk. Faisal Islamic Bank is currently generating about 0.16 per unit of risk. If you would invest  640.00  in Nozha International Hospital on September 15, 2024 and sell it today you would earn a total of  295.00  from holding Nozha International Hospital or generate 46.09% return on investment over 90 days.

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

Nozha International Hospital  vs.  Faisal Islamic Bank

Nozha International

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nozha International Hospital are ranked lower than 15 (%) 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.

Faisal Islamic Bank

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Nozha International and Faisal Islamic

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

The idea behind Nozha International Hospital and Faisal Islamic 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.