Correlation Between Qatar Natl and Ismailia Development

Can any of the company-specific risk be diversified away by investing in both Qatar Natl and Ismailia Development 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 Qatar Natl and Ismailia Development into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Qatar Natl and Ismailia Development

-0.41

Correlation Coefficient

Qatar Natl  Ismailia Development

Very good diversification

The 3 months correlation between Qatar and Ismailia is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Qatar Natl Bank and Ismailia Development and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ismailia Development and and Qatar Natl 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 Qatar Natl Bank are associated (or correlated) with Ismailia Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ismailia Development and has no effect on the direction of Qatar Natl i.e., Qatar Natl and Ismailia Development go up and down completely randomly.

Pair Corralation between Qatar Natl and Ismailia Development

Assuming the 90 days trading horizon Qatar Natl Bank is expected to under-perform the Ismailia Development. But the stock apears to be less risky and, when comparing its historical volatility, Qatar Natl Bank is 5.64 times less risky than Ismailia Development. The stock trades about -0.08 of its potential returns per unit of risk. The Ismailia Development and is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,817  in Ismailia Development and on December 29, 2024 and sell it today you would earn a total of  986.00  from holding Ismailia Development and or generate 54.27% return on investment over 90 days.

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

Qatar Natl Bank  vs.  Ismailia Development and

Qatar Natl Bank

Risk-Adjusted Performance

Very Weak

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

Ismailia Development and

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ismailia Development and are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Ismailia Development reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qatar Natl and Ismailia Development

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

The idea behind Qatar Natl Bank and Ismailia Development and 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.