Correlation Between ODIN Investments and Faisal Islamic

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

By analyzing existing cross correlation between ODIN Investments and Faisal Islamic Bank, you can compare the effects of market volatilities on ODIN Investments and Faisal Islamic 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 ODIN Investments with a short position of Faisal Islamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of ODIN Investments and Faisal Islamic.

Diversification Opportunities for ODIN Investments and Faisal Islamic

0.52

Correlation Coefficient

ODIN Investments  Faisal Islamic

Very weak diversification

The 3 months correlation between ODIN and Faisal is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding ODIN Investments and Faisal Islamic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faisal Islamic Bank and ODIN Investments 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 ODIN Investments are associated (or correlated) with Faisal Islamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faisal Islamic Bank has no effect on the direction of ODIN Investments i.e., ODIN Investments and Faisal Islamic go up and down completely randomly.

Pair Corralation between ODIN Investments and Faisal Islamic

Assuming the 90 days trading horizon ODIN Investments is expected to generate 2.88 times less return on investment than Faisal Islamic. In addition to that, ODIN Investments is 1.14 times more volatile than Faisal Islamic Bank. It trades about 0.05 of its total potential returns per unit of risk. Faisal Islamic Bank is currently generating about 0.16 per unit of volatility. If you would invest  3,114  in Faisal Islamic Bank on September 17, 2024 and sell it today you would earn a total of  824.00  from holding Faisal Islamic Bank or generate 26.46% return on investment over 90 days.

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

ODIN Investments  vs.  Faisal Islamic Bank

ODIN Investments

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ODIN Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, ODIN Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Faisal Islamic Bank

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Faisal Islamic Bank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Faisal Islamic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ODIN Investments and Faisal Islamic

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

The idea behind ODIN Investments and Faisal Islamic Bank 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.