Correlation Between Arab Co and Extracted Oils

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

By analyzing existing cross correlation between Arab Co for and Extracted Oils, you can compare the effects of market volatilities on Arab Co and Extracted Oils 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 Arab Co with a short position of Extracted Oils. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arab Co and Extracted Oils.

Diversification Opportunities for Arab Co and Extracted Oils

-0.2

Correlation Coefficient

Arab Co  Extracted Oils

Good diversification

The 3 months correlation between Arab and Extracted is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Arab Co for and Extracted Oils in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extracted Oils and Arab Co 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 Arab Co for are associated (or correlated) with Extracted Oils. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extracted Oils has no effect on the direction of Arab Co i.e., Arab Co and Extracted Oils go up and down completely randomly.

Pair Corralation between Arab Co and Extracted Oils

Assuming the 90 days trading horizon Arab Co for is expected to under-perform the Extracted Oils. But the stock apears to be less risky and, when comparing its historical volatility, Arab Co for is 1.49 times less risky than Extracted Oils. The stock trades about -0.03 of its potential returns per unit of risk. The Extracted Oils is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  341.00  in Extracted Oils on April 25, 2025 and sell it today you would earn a total of  18.00  from holding Extracted Oils or generate 5.28% return on investment over 90 days.

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

Arab Co for  vs.  Extracted Oils

Arab Co for

Risk-Adjusted Performance

Very Weak

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

Extracted Oils

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Extracted Oils are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Extracted Oils may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Arab Co and Extracted Oils

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

The idea behind Arab Co for and Extracted Oils 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.