Correlation Between QL Resources and Saudee Group

Can any of the company-specific risk be diversified away by investing in both QL Resources and Saudee Group 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 QL Resources and Saudee Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between QL Resources Bhd and Saudee Group Bhd, you can compare the effects of market volatilities on QL Resources and Saudee Group 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 QL Resources with a short position of Saudee Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of QL Resources and Saudee Group.

Diversification Opportunities for QL Resources and Saudee Group

0.02

Correlation Coefficient

QL Resources  Saudee Group

Significant diversification

The 3 months correlation between 7084 and Saudee is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding QL Resources Bhd and Saudee Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saudee Group Bhd and QL Resources 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 QL Resources Bhd are associated (or correlated) with Saudee Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saudee Group Bhd has no effect on the direction of QL Resources i.e., QL Resources and Saudee Group go up and down completely randomly.

Pair Corralation between QL Resources and Saudee Group

Assuming the 90 days trading horizon QL Resources Bhd is expected to under-perform the Saudee Group. But the stock apears to be less risky and, when comparing its historical volatility, QL Resources Bhd is 16.42 times less risky than Saudee Group. The stock trades about -0.03 of its potential returns per unit of risk. The Saudee Group Bhd is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Saudee Group Bhd on September 24, 2024 and sell it today you would earn a total of  0.50  from holding Saudee Group Bhd or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

QL Resources Bhd  vs.  Saudee Group Bhd

QL Resources Bhd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in QL Resources Bhd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, QL Resources is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Saudee Group Bhd

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saudee Group Bhd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Saudee Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with QL Resources and Saudee Group

The main advantage of trading using opposite QL Resources and Saudee Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QL Resources position performs unexpectedly, Saudee Group 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 Saudee Group will offset losses from the drop in Saudee Group's long position.

The idea behind QL Resources Bhd and Saudee Group Bhd 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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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.