Correlation Between Sharkia National and Arab Dairy

Can any of the company-specific risk be diversified away by investing in both Sharkia National and Arab Dairy 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 Sharkia National and Arab Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sharkia National Food and The Arab Dairy, you can compare the effects of market volatilities on Sharkia National and Arab Dairy 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 Sharkia National with a short position of Arab Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sharkia National and Arab Dairy.

Diversification Opportunities for Sharkia National and Arab Dairy

0.09

Correlation Coefficient

Sharkia National  Arab Dairy

Significant diversification

The 3 months correlation between Sharkia and Arab is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sharkia National Food and The Arab Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arab Dairy and Sharkia National 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 Sharkia National Food are associated (or correlated) with Arab Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arab Dairy has no effect on the direction of Sharkia National i.e., Sharkia National and Arab Dairy go up and down completely randomly.

Pair Corralation between Sharkia National and Arab Dairy

Assuming the 90 days trading horizon Sharkia National Food is expected to generate 0.99 times more return on investment than Arab Dairy. However, Sharkia National Food is 1.01 times less risky than Arab Dairy. It trades about 0.15 of its potential returns per unit of risk. The Arab Dairy is currently generating about -0.07 per unit of risk. If you would invest  542.00  in Sharkia National Food on December 13, 2024 and sell it today you would earn a total of  90.00  from holding Sharkia National Food or generate 16.61% return on investment over 90 days.

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

Sharkia National Food  vs.  The Arab Dairy

Sharkia National Food

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sharkia National Food are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Sharkia National reported solid returns over the last few months and may actually be approaching a breakup point.

Arab Dairy

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Arab Dairy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Pair Trading with Sharkia National and Arab Dairy

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

The idea behind Sharkia National Food and The Arab Dairy 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.