Correlation Between International Agricultural and El Ahli
Can any of the company-specific risk be diversified away by investing in both International Agricultural and El Ahli 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 International Agricultural and El Ahli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Agricultural Products and El Ahli Investment, you can compare the effects of market volatilities on International Agricultural and El Ahli 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 International Agricultural with a short position of El Ahli. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Agricultural and El Ahli.
Diversification Opportunities for International Agricultural and El Ahli
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and AFDI is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding International Agricultural Pro and El Ahli Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Ahli Investment and International Agricultural 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 International Agricultural Products are associated (or correlated) with El Ahli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Ahli Investment has no effect on the direction of International Agricultural i.e., International Agricultural and El Ahli go up and down completely randomly.
Pair Corralation between International Agricultural and El Ahli
Assuming the 90 days trading horizon International Agricultural Products is expected to generate 1.17 times more return on investment than El Ahli. However, International Agricultural is 1.17 times more volatile than El Ahli Investment. It trades about 0.32 of its potential returns per unit of risk. El Ahli Investment is currently generating about -0.09 per unit of risk. If you would invest 1,894 in International Agricultural Products on November 2, 2024 and sell it today you would earn a total of 211.00 from holding International Agricultural Products or generate 11.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Agricultural Pro vs. El Ahli Investment
Performance |
| Timeline |
| International Agricultural |
| El Ahli Investment |
International Agricultural and El Ahli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Agricultural and El Ahli
The main advantage of trading using opposite International Agricultural and El Ahli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Agricultural position performs unexpectedly, El Ahli 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 El Ahli will offset losses from the drop in El Ahli's long position.The idea behind International Agricultural Products and El Ahli Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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