Correlation Between Faisal Islamic and Arabian Food
Can any of the company-specific risk be diversified away by investing in both Faisal Islamic and Arabian Food 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 Faisal Islamic and Arabian Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faisal Islamic Bank and Arabian Food Industries, you can compare the effects of market volatilities on Faisal Islamic and Arabian Food 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 Faisal Islamic with a short position of Arabian Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faisal Islamic and Arabian Food.
Diversification Opportunities for Faisal Islamic and Arabian Food
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Faisal and Arabian is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Faisal Islamic Bank and Arabian Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arabian Food Industries and Faisal Islamic 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 Faisal Islamic Bank are associated (or correlated) with Arabian Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arabian Food Industries has no effect on the direction of Faisal Islamic i.e., Faisal Islamic and Arabian Food go up and down completely randomly.
Pair Corralation between Faisal Islamic and Arabian Food
Assuming the 90 days trading horizon Faisal Islamic is expected to generate 3.71 times less return on investment than Arabian Food. But when comparing it to its historical volatility, Faisal Islamic Bank is 2.11 times less risky than Arabian Food. It trades about 0.07 of its potential returns per unit of risk. Arabian Food Industries is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 709.00 in Arabian Food Industries on August 31, 2024 and sell it today you would earn a total of 1,991 from holding Arabian Food Industries or generate 280.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faisal Islamic Bank vs. Arabian Food Industries
Performance |
| Timeline |
| Faisal Islamic Bank |
| Arabian Food Industries |
Faisal Islamic and Arabian Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faisal Islamic and Arabian Food
The main advantage of trading using opposite Faisal Islamic and Arabian Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faisal Islamic position performs unexpectedly, Arabian Food 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 Arabian Food will offset losses from the drop in Arabian Food's long position.| Faisal Islamic vs. Egyptians For Investment | Faisal Islamic vs. Misr Hotels | Faisal Islamic vs. International Agricultural Products | Faisal Islamic vs. El Ahli Investment |
| Arabian Food vs. Misr Hotels | Arabian Food vs. El Ahli Investment | Arabian Food vs. Egyptians For Investment | Arabian Food 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |