Correlation Between Aran Research and Global Knafaim

Can any of the company-specific risk be diversified away by investing in both Aran Research and Global Knafaim 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 Aran Research and Global Knafaim into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aran Research and and Global Knafaim Leasing, you can compare the effects of market volatilities on Aran Research and Global Knafaim 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 Aran Research with a short position of Global Knafaim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aran Research and Global Knafaim.

Diversification Opportunities for Aran Research and Global Knafaim

0.07

Correlation Coefficient

Aran Research  Global Knafaim

Significant diversification

The 3 months correlation between Aran and Global is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Aran Research and and Global Knafaim Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Knafaim Leasing and Aran Research 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 Aran Research and are associated (or correlated) with Global Knafaim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Knafaim Leasing has no effect on the direction of Aran Research i.e., Aran Research and Global Knafaim go up and down completely randomly.

Pair Corralation between Aran Research and Global Knafaim

Assuming the 90 days trading horizon Aran Research is expected to generate 1.56 times less return on investment than Global Knafaim. In addition to that, Aran Research is 1.29 times more volatile than Global Knafaim Leasing. It trades about 0.12 of its total potential returns per unit of risk. Global Knafaim Leasing is currently generating about 0.25 per unit of volatility. If you would invest  7,380  in Global Knafaim Leasing on September 17, 2024 and sell it today you would earn a total of  570.00  from holding Global Knafaim Leasing or generate 7.72% return on investment over 90 days.

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

Aran Research and  vs.  Global Knafaim Leasing

Aran Research

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aran Research and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aran Research may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global Knafaim Leasing

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Knafaim Leasing are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Global Knafaim sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aran Research and Global Knafaim

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

The idea behind Aran Research and and Global Knafaim Leasing 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.