Correlation Between Faisal Islamic and Gadwa For
Can any of the company-specific risk be diversified away by investing in both Faisal Islamic and Gadwa For 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 Gadwa For 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 Gadwa For Industrial, you can compare the effects of market volatilities on Faisal Islamic and Gadwa For 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 Gadwa For. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faisal Islamic and Gadwa For.
Diversification Opportunities for Faisal Islamic and Gadwa For
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Faisal and Gadwa is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Faisal Islamic Bank and Gadwa For Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gadwa For Industrial 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 Gadwa For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gadwa For Industrial has no effect on the direction of Faisal Islamic i.e., Faisal Islamic and Gadwa For go up and down completely randomly.
Pair Corralation between Faisal Islamic and Gadwa For
Assuming the 90 days trading horizon Faisal Islamic Bank is expected to under-perform the Gadwa For. But the stock apears to be less risky and, when comparing its historical volatility, Faisal Islamic Bank is 3.81 times less risky than Gadwa For. The stock trades about 0.0 of its potential returns per unit of risk. The Gadwa For Industrial is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 417.00 in Gadwa For Industrial on December 14, 2024 and sell it today you would earn a total of 185.00 from holding Gadwa For Industrial or generate 44.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faisal Islamic Bank vs. Gadwa For Industrial
Performance |
| Timeline |
| Faisal Islamic Bank |
| Gadwa For Industrial |
Faisal Islamic and Gadwa For Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faisal Islamic and Gadwa For
The main advantage of trading using opposite Faisal Islamic and Gadwa For positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faisal Islamic position performs unexpectedly, Gadwa For 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 Gadwa For will offset losses from the drop in Gadwa For's long position.| Faisal Islamic vs. El Nasr Clothes | ||
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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