Correlation Between Nations Trust and Asiri Surgical

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

By analyzing existing cross correlation between Nations Trust Bank and Asiri Surgical Hospital, you can compare the effects of market volatilities on Nations Trust and Asiri Surgical 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 Nations Trust with a short position of Asiri Surgical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nations Trust and Asiri Surgical.

Diversification Opportunities for Nations Trust and Asiri Surgical

0.56

Correlation Coefficient

Nations Trust  Asiri Surgical

Very weak diversification

The 3 months correlation between Nations and Asiri is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nations Trust Bank and Asiri Surgical Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiri Surgical Hospital and Nations Trust 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 Nations Trust Bank are associated (or correlated) with Asiri Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiri Surgical Hospital has no effect on the direction of Nations Trust i.e., Nations Trust and Asiri Surgical go up and down completely randomly.

Pair Corralation between Nations Trust and Asiri Surgical

Assuming the 90 days trading horizon Nations Trust Bank is expected to generate 1.12 times more return on investment than Asiri Surgical. However, Nations Trust is 1.12 times more volatile than Asiri Surgical Hospital. It trades about 0.26 of its potential returns per unit of risk. Asiri Surgical Hospital is currently generating about -0.09 per unit of risk. If you would invest  17,400  in Nations Trust Bank on October 25, 2024 and sell it today you would earn a total of  1,675  from holding Nations Trust Bank or generate 9.63% return on investment over 90 days.

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

Nations Trust Bank  vs.  Asiri Surgical Hospital

Nations Trust Bank

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Nations Trust Bank are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nations Trust sustained solid returns over the last few months and may actually be approaching a breakup point.

Asiri Surgical Hospital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asiri Surgical Hospital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Asiri Surgical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nations Trust and Asiri Surgical

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

The idea behind Nations Trust Bank and Asiri Surgical Hospital 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.