Correlation Between Al Khair and Natural Gas
Can any of the company-specific risk be diversified away by investing in both Al Khair and Natural Gas 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 Al Khair and Natural Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Al Khair River and Natural Gas Mining, you can compare the effects of market volatilities on Al Khair and Natural Gas 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 Al Khair with a short position of Natural Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Khair and Natural Gas.
Diversification Opportunities for Al Khair and Natural Gas
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KRDI and Natural is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Al Khair River and Natural Gas Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Gas Mining and Al Khair 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 Al Khair River are associated (or correlated) with Natural Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Gas Mining has no effect on the direction of Al Khair i.e., Al Khair and Natural Gas go up and down completely randomly.
Pair Corralation between Al Khair and Natural Gas
Assuming the 90 days trading horizon Al Khair River is expected to under-perform the Natural Gas. But the stock apears to be less risky and, when comparing its historical volatility, Al Khair River is 1.66 times less risky than Natural Gas. The stock trades about -0.01 of its potential returns per unit of risk. The Natural Gas Mining is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,672 in Natural Gas Mining on October 26, 2024 and sell it today you would earn a total of 1,358 from holding Natural Gas Mining or generate 50.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Al Khair River vs. Natural Gas Mining
Performance |
| Timeline |
| Al Khair River |
| Natural Gas Mining |
Al Khair and Natural Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Al Khair and Natural Gas
The main advantage of trading using opposite Al Khair and Natural Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Khair position performs unexpectedly, Natural Gas 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 Natural Gas will offset losses from the drop in Natural Gas' long position.| Al Khair vs. Paint Chemicals Industries | Al Khair vs. Reacap Financial Investments | Al Khair vs. Egyptians For Investment | Al Khair vs. Misr Oils Soap |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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