Correlation Between Al Khair and Organic Meat

Can any of the company-specific risk be diversified away by investing in both Al Khair and Organic Meat 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 Organic Meat into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Al Khair Gadoon Limited and The Organic Meat, you can compare the effects of market volatilities on Al Khair and Organic Meat 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 Organic Meat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Khair and Organic Meat.

Diversification Opportunities for Al Khair and Organic Meat

-0.78

Correlation Coefficient

Al Khair  Organic Meat

Pay attention - limited upside

The 3 months correlation between AKGL and Organic is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Al Khair Gadoon Limited and The Organic Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Meat 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 Gadoon Limited are associated (or correlated) with Organic Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Meat has no effect on the direction of Al Khair i.e., Al Khair and Organic Meat go up and down completely randomly.

Pair Corralation between Al Khair and Organic Meat

Assuming the 90 days trading horizon Al Khair Gadoon Limited is expected to generate 2.96 times more return on investment than Organic Meat. However, Al Khair is 2.96 times more volatile than The Organic Meat. It trades about 0.1 of its potential returns per unit of risk. The Organic Meat is currently generating about -0.07 per unit of risk. If you would invest  3,387  in Al Khair Gadoon Limited on September 3, 2024 and sell it today you would earn a total of  363.00  from holding Al Khair Gadoon Limited or generate 10.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	32.81%
Values	Daily Returns

Al Khair Gadoon Limited  vs.  The Organic Meat

Al Khair Gadoon

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Al Khair Gadoon Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Al Khair sustained solid returns over the last few months and may actually be approaching a breakup point.

Organic Meat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Organic Meat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Al Khair and Organic Meat

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

The idea behind Al Khair Gadoon Limited and The Organic Meat 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.