Correlation Between Sanasa Development and Asiri Surgical

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

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

Diversification Opportunities for Sanasa Development and Asiri Surgical

0.71

Correlation Coefficient

Sanasa Development  Asiri Surgical

Poor diversification

The 3 months correlation between Sanasa and Asiri is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sanasa Development 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 Sanasa Development 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 Sanasa Development 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 Sanasa Development i.e., Sanasa Development and Asiri Surgical go up and down completely randomly.

Pair Corralation between Sanasa Development and Asiri Surgical

Assuming the 90 days trading horizon Sanasa Development Bank is expected to generate 1.93 times more return on investment than Asiri Surgical. However, Sanasa Development is 1.93 times more volatile than Asiri Surgical Hospital. It trades about 0.33 of its potential returns per unit of risk. Asiri Surgical Hospital is currently generating about 0.14 per unit of risk. If you would invest  3,290  in Sanasa Development Bank on October 11, 2024 and sell it today you would earn a total of  1,080  from holding Sanasa Development Bank or generate 32.83% return on investment over 90 days.

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

Sanasa Development Bank  vs.  Asiri Surgical Hospital

Sanasa Development Bank

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sanasa Development Bank are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sanasa Development 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 Sanasa Development and Asiri Surgical

The main advantage of trading using opposite Sanasa Development and Asiri Surgical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanasa Development 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 Sanasa Development 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.