Correlation Between Al Baraka and Grand Investment

Can any of the company-specific risk be diversified away by investing in both Al Baraka and Grand Investment 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 Al Baraka and Grand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Al Baraka Bank and Grand Investment Capital, you can compare the effects of market volatilities on Al Baraka and Grand Investment 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 Al Baraka with a short position of Grand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Baraka and Grand Investment.

Diversification Opportunities for Al Baraka and Grand Investment

-0.62

Correlation Coefficient

Al Baraka  Grand Investment

Excellent diversification

The 3 months correlation between SAUD and Grand is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Al Baraka Bank and Grand Investment Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Investment Capital and Al Baraka 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 Al Baraka Bank are associated (or correlated) with Grand Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Investment Capital has no effect on the direction of Al Baraka i.e., Al Baraka and Grand Investment go up and down completely randomly.

Pair Corralation between Al Baraka and Grand Investment

Assuming the 90 days trading horizon Al Baraka Bank is expected to under-perform the Grand Investment. But the stock apears to be less risky and, when comparing its historical volatility, Al Baraka Bank is 2.59 times less risky than Grand Investment. The stock trades about -0.14 of its potential returns per unit of risk. The Grand Investment Capital is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  946.00  in Grand Investment Capital on December 21, 2024 and sell it today you would earn a total of  290.00  from holding Grand Investment Capital or generate 30.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.04%
Values	Daily Returns

Al Baraka Bank  vs.  Grand Investment Capital

Al Baraka Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Al Baraka Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Grand Investment Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Investment Capital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Grand Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Al Baraka and Grand Investment

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

The idea behind Al Baraka Bank and Grand Investment Capital 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.