Correlation Between Al Tawfeek and Al Arafa

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

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

Diversification Opportunities for Al Tawfeek and Al Arafa

0.0

Correlation Coefficient

Al Tawfeek  Al Arafa

Pay attention - limited upside

The 3 months correlation between ATLC and AIVCB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Al Tawfeek Leasing and Al Arafa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Arafa Investment and Al Tawfeek 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 Tawfeek Leasing are associated (or correlated) with Al Arafa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Arafa Investment has no effect on the direction of Al Tawfeek i.e., Al Tawfeek and Al Arafa go up and down completely randomly.

Pair Corralation between Al Tawfeek and Al Arafa

If you would invest  405.00  in Al Tawfeek Leasing on September 25, 2024 and sell it today you would earn a total of  48.00  from holding Al Tawfeek Leasing or generate 11.85% return on investment over 90 days.

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

Al Tawfeek Leasing  vs.  Al Arafa Investment

Al Tawfeek Leasing

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Al Tawfeek Leasing are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Al Tawfeek reported solid returns over the last few months and may actually be approaching a breakup point.

Al Arafa Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Al Arafa Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Al Arafa is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Al Tawfeek and Al Arafa

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

The idea behind Al Tawfeek Leasing and Al Arafa Investment 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.