Correlation Between Central Industrial and Al Aqar
Can any of the company-specific risk be diversified away by investing in both Central Industrial and Al Aqar 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 Central Industrial and Al Aqar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Industrial Corp and Al Aqar Healthcare, you can compare the effects of market volatilities on Central Industrial and Al Aqar 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 Central Industrial with a short position of Al Aqar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Industrial and Al Aqar.
Diversification Opportunities for Central Industrial and Al Aqar
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Central and 5116 is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Central Industrial Corp and Al Aqar Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Aqar Healthcare and Central Industrial 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 Central Industrial Corp are associated (or correlated) with Al Aqar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Aqar Healthcare has no effect on the direction of Central Industrial i.e., Central Industrial and Al Aqar go up and down completely randomly.
Pair Corralation between Central Industrial and Al Aqar
Assuming the 90 days trading horizon Central Industrial Corp is expected to generate 0.74 times more return on investment than Al Aqar. However, Central Industrial Corp is 1.35 times less risky than Al Aqar. It trades about 0.16 of its potential returns per unit of risk. Al Aqar Healthcare is currently generating about -0.06 per unit of risk. If you would invest 83.00 in Central Industrial Corp on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Central Industrial Corp or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Industrial Corp vs. Al Aqar Healthcare
Performance |
| Timeline |
| Central Industrial Corp |
| Al Aqar Healthcare |
Central Industrial and Al Aqar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Industrial and Al Aqar
The main advantage of trading using opposite Central Industrial and Al Aqar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Industrial position performs unexpectedly, Al Aqar 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 Al Aqar will offset losses from the drop in Al Aqar's long position.| Central Industrial vs. JAKS Resources Bhd | Central Industrial vs. Protasco Bhd | Central Industrial vs. Mercury Industries Bhd |
| Al Aqar vs. Petronas Chemicals Group | Al Aqar vs. TAS Offshore Bhd | Al Aqar vs. Dnonce Tech Bhd | Al Aqar vs. CPE Technology Berhad |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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