Correlation Between Al Baraka and Natural Gas
Can any of the company-specific risk be diversified away by investing in both Al Baraka 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 Baraka 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 Baraka Bank and Natural Gas Mining, you can compare the effects of market volatilities on Al Baraka 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 Baraka with a short position of Natural Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Baraka and Natural Gas.
Diversification Opportunities for Al Baraka and Natural Gas
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SAUD and Natural is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Al Baraka Bank 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 Baraka 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 Baraka Bank 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 Baraka i.e., Al Baraka and Natural Gas go up and down completely randomly.
Pair Corralation between Al Baraka and Natural Gas
Assuming the 90 days trading horizon Al Baraka Bank is expected to generate 1.43 times more return on investment than Natural Gas. However, Al Baraka is 1.43 times more volatile than Natural Gas Mining. It trades about -0.12 of its potential returns per unit of risk. Natural Gas Mining is currently generating about -0.17 per unit of risk. If you would invest 1,398 in Al Baraka Bank on September 14, 2024 and sell it today you would lose (57.00) from holding Al Baraka Bank or give up 4.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Al Baraka Bank vs. Natural Gas Mining
Performance |
| Timeline |
| Al Baraka Bank |
| Natural Gas Mining |
Al Baraka and Natural Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Al Baraka and Natural Gas
The main advantage of trading using opposite Al Baraka and Natural Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Baraka 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 Baraka vs. Paint Chemicals Industries | Al Baraka vs. Reacap Financial Investments | Al Baraka vs. Egyptians For Investment | Al Baraka vs. Misr Oils Soap |
| Natural Gas vs. Paint Chemicals Industries | Natural Gas vs. Reacap Financial Investments | Natural Gas vs. Egyptians For Investment | Natural Gas vs. Misr Oils Soap |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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