Correlation Between Arabian Food and General Silos
Can any of the company-specific risk be diversified away by investing in both Arabian Food and General Silos 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 Arabian Food and General Silos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arabian Food Industries and General Silos Storage, you can compare the effects of market volatilities on Arabian Food and General Silos 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 Arabian Food with a short position of General Silos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arabian Food and General Silos.
Diversification Opportunities for Arabian Food and General Silos
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arabian and General is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Arabian Food Industries and General Silos Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Silos Storage and Arabian Food 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 Arabian Food Industries are associated (or correlated) with General Silos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Silos Storage has no effect on the direction of Arabian Food i.e., Arabian Food and General Silos go up and down completely randomly.
Pair Corralation between Arabian Food and General Silos
Assuming the 90 days trading horizon Arabian Food Industries is expected to generate 0.18 times more return on investment than General Silos. However, Arabian Food Industries is 5.65 times less risky than General Silos. It trades about 0.03 of its potential returns per unit of risk. General Silos Storage is currently generating about -0.21 per unit of risk. If you would invest 2,681 in Arabian Food Industries on September 4, 2024 and sell it today you would earn a total of 11.00 from holding Arabian Food Industries or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arabian Food Industries vs. General Silos Storage
Performance |
| Timeline |
| Arabian Food Industries |
| General Silos Storage |
Arabian Food and General Silos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arabian Food and General Silos
The main advantage of trading using opposite Arabian Food and General Silos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arabian Food position performs unexpectedly, General Silos 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 General Silos will offset losses from the drop in General Silos' long position.| Arabian Food vs. Paint Chemicals Industries | Arabian Food vs. Egyptians For Investment | Arabian Food vs. Misr Oils Soap | Arabian Food vs. Global Telecom Holding |
| General Silos vs. Arab Moltaka Investments | General Silos vs. Ezz Steel | General Silos vs. Nozha International Hospital | General Silos vs. Arabian Food Industries |
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 Stocks Directory module to find actively traded stocks across global markets.
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