Correlation Between Speed Medical and Arabian Food
Can any of the company-specific risk be diversified away by investing in both Speed Medical 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 Speed Medical and Arabian Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Speed Medical and Arabian Food Industries, you can compare the effects of market volatilities on Speed Medical 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 Speed Medical with a short position of Arabian Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Speed Medical and Arabian Food.
Diversification Opportunities for Speed Medical and Arabian Food
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Speed and Arabian is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Speed Medical 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 Speed Medical 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 Speed Medical 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 Speed Medical i.e., Speed Medical and Arabian Food go up and down completely randomly.
Pair Corralation between Speed Medical and Arabian Food
Assuming the 90 days trading horizon Speed Medical is expected to under-perform the Arabian Food. But the stock apears to be less risky and, when comparing its historical volatility, Speed Medical is 2.3 times less risky than Arabian Food. The stock trades about -0.02 of its potential returns per unit of risk. The Arabian Food Industries is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,470 in Arabian Food Industries on September 12, 2024 and sell it today you would earn a total of 1,237 from holding Arabian Food Industries or generate 84.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Speed Medical vs. Arabian Food Industries
Performance |
| Timeline |
| Speed Medical |
| Arabian Food Industries |
Speed Medical and Arabian Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Speed Medical and Arabian Food
The main advantage of trading using opposite Speed Medical and Arabian Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Speed Medical 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.| Speed Medical vs. National Drilling | Speed Medical vs. Medical Packaging | Speed Medical vs. Misr National Steel | Speed Medical vs. Odin for Investment |
| Arabian Food vs. The Arab Dairy | Arabian Food vs. Sharkia National Food | Arabian Food vs. Cairo For Investment | Arabian Food vs. Al Arafa Investment |
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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