Correlation Between Arabia Investments and Grand Investment
Can any of the company-specific risk be diversified away by investing in both Arabia Investments 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 Arabia Investments and Grand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arabia Investments Holding and Grand Investment Capital, you can compare the effects of market volatilities on Arabia Investments 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 Arabia Investments with a short position of Grand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arabia Investments and Grand Investment.
Diversification Opportunities for Arabia Investments and Grand Investment
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arabia and Grand is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Arabia Investments Holding 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 Arabia Investments 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 Arabia Investments Holding 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 Arabia Investments i.e., Arabia Investments and Grand Investment go up and down completely randomly.
Pair Corralation between Arabia Investments and Grand Investment
Assuming the 90 days trading horizon Arabia Investments Holding is expected to under-perform the Grand Investment. But the stock apears to be less risky and, when comparing its historical volatility, Arabia Investments Holding is 1.46 times less risky than Grand Investment. The stock trades about -0.05 of its potential returns per unit of risk. The Grand Investment Capital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 794.00 in Grand Investment Capital on October 14, 2024 and sell it today you would earn a total of 343.00 from holding Grand Investment Capital or generate 43.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arabia Investments Holding vs. Grand Investment Capital
Performance |
| Timeline |
| Arabia Investments |
| Grand Investment Capital |
Arabia Investments and Grand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arabia Investments and Grand Investment
The main advantage of trading using opposite Arabia Investments and Grand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arabia Investments 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.| Arabia Investments vs. Alexandria New Medical | Arabia Investments vs. Delta Insurance | Arabia Investments vs. Al Baraka Bank | Arabia Investments vs. El Ahli Investment |
| Grand Investment vs. Misr Chemical Industries | Grand Investment vs. Digitize for Investment | Grand Investment vs. Arabia Investments Holding | Grand Investment vs. Misr Financial Investments |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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