Correlation Between Qatar Natl and Medical Packaging

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

Diversification Opportunities for Qatar Natl and Medical Packaging

-0.4

Correlation Coefficient

Qatar Natl  Medical Packaging

Very good diversification

The 3 months correlation between Qatar and Medical is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Qatar Natl Bank and Medical Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Packaging 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 Medical Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Packaging has no effect on the direction of Qatar Natl i.e., Qatar Natl and Medical Packaging go up and down completely randomly.

Pair Corralation between Qatar Natl and Medical Packaging

Assuming the 90 days trading horizon Qatar Natl is expected to generate 17.28 times less return on investment than Medical Packaging. But when comparing it to its historical volatility, Qatar Natl Bank is 2.71 times less risky than Medical Packaging. It trades about 0.01 of its potential returns per unit of risk. Medical Packaging is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  124.00  in Medical Packaging on October 11, 2024 and sell it today you would earn a total of  2.00  from holding Medical Packaging or generate 1.61% 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.  Medical Packaging

Qatar Natl Bank

Risk-Adjusted Performance

4 of 100

Insignificant

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

Medical Packaging

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Packaging are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Medical Packaging is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Qatar Natl and Medical Packaging

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

The idea behind Qatar Natl Bank and Medical Packaging 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.