Correlation Between Arabian Food and Fawry For

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

By analyzing existing cross correlation between Arabian Food Industries and Fawry For Banking, you can compare the effects of market volatilities on Arabian Food and Fawry For 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 Arabian Food with a short position of Fawry For. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arabian Food and Fawry For.

Diversification Opportunities for Arabian Food and Fawry For

0.5

Correlation Coefficient

Arabian Food  Fawry For

Very weak diversification

The 3 months correlation between Arabian and Fawry is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Arabian Food Industries and Fawry For Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fawry For Banking and Arabian Food 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 Arabian Food Industries are associated (or correlated) with Fawry For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fawry For Banking has no effect on the direction of Arabian Food i.e., Arabian Food and Fawry For go up and down completely randomly.

Pair Corralation between Arabian Food and Fawry For

Assuming the 90 days trading horizon Arabian Food Industries is expected to generate 2.22 times more return on investment than Fawry For. However, Arabian Food is 2.22 times more volatile than Fawry For Banking. It trades about 0.27 of its potential returns per unit of risk. Fawry For Banking is currently generating about 0.12 per unit of risk. If you would invest  1,492  in Arabian Food Industries on September 17, 2024 and sell it today you would earn a total of  1,209  from holding Arabian Food Industries or generate 81.03% return on investment over 90 days.

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

Arabian Food Industries  vs.  Fawry For Banking

Arabian Food Industries

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arabian Food Industries are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Arabian Food reported solid returns over the last few months and may actually be approaching a breakup point.

Fawry For Banking

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fawry For Banking are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Fawry For reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arabian Food and Fawry For

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

The idea behind Arabian Food Industries and Fawry For Banking 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.