Correlation Between Qatar Natl and Arabian Food
Can any of the company-specific risk be diversified away by investing in both Qatar Natl 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 Qatar Natl and Arabian Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qatar Natl Bank and Arabian Food Industries, you can compare the effects of market volatilities on Qatar Natl 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 Qatar Natl with a short position of Arabian Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qatar Natl and Arabian Food.
Diversification Opportunities for Qatar Natl and Arabian Food
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Qatar and Arabian is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Qatar Natl 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 Qatar Natl 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 Qatar Natl 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 Qatar Natl i.e., Qatar Natl and Arabian Food go up and down completely randomly.
Pair Corralation between Qatar Natl and Arabian Food
Assuming the 90 days trading horizon Qatar Natl Bank is expected to generate 2.46 times more return on investment than Arabian Food. However, Qatar Natl is 2.46 times more volatile than Arabian Food Industries. It trades about 0.22 of its potential returns per unit of risk. Arabian Food Industries is currently generating about 0.05 per unit of risk. If you would invest 3,228 in Qatar Natl Bank on September 2, 2024 and sell it today you would earn a total of 242.00 from holding Qatar Natl Bank or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qatar Natl Bank vs. Arabian Food Industries
Performance |
| Timeline |
| Qatar Natl Bank |
| Arabian Food Industries |
Qatar Natl and Arabian Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qatar Natl and Arabian Food
The main advantage of trading using opposite Qatar Natl and Arabian Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qatar Natl 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.| Qatar Natl vs. Egyptians For Investment | Qatar Natl vs. Misr Oils Soap | Qatar Natl vs. Global Telecom Holding | Qatar Natl vs. Orascom Construction PLC |
| Arabian Food vs. Egyptians For Investment | Arabian Food vs. Misr Oils Soap | Arabian Food vs. Global Telecom Holding | Arabian Food vs. Qatar Natl Bank |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |