Correlation Between Al Khair and Fateh Sports

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

By analyzing existing cross correlation between Al Khair Gadoon Limited and Fateh Sports Wear, you can compare the effects of market volatilities on Al Khair and Fateh Sports 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 Khair with a short position of Fateh Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Khair and Fateh Sports.

Diversification Opportunities for Al Khair and Fateh Sports

-0.36

Correlation Coefficient

Al Khair  Fateh Sports

Very good diversification

The 3 months correlation between AKGL and Fateh is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Al Khair Gadoon Limited and Fateh Sports Wear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fateh Sports Wear and Al Khair 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 Khair Gadoon Limited are associated (or correlated) with Fateh Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fateh Sports Wear has no effect on the direction of Al Khair i.e., Al Khair and Fateh Sports go up and down completely randomly.

Pair Corralation between Al Khair and Fateh Sports

Assuming the 90 days trading horizon Al Khair is expected to generate 3.38 times less return on investment than Fateh Sports. But when comparing it to its historical volatility, Al Khair Gadoon Limited is 1.2 times less risky than Fateh Sports. It trades about 0.18 of its potential returns per unit of risk. Fateh Sports Wear is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest  7,793  in Fateh Sports Wear on April 25, 2025 and sell it today you would earn a total of  3,244  from holding Fateh Sports Wear or generate 41.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.5%
Values	Daily Returns

Al Khair Gadoon Limited  vs.  Fateh Sports Wear

Al Khair Gadoon

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Al Khair Gadoon Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Al Khair sustained solid returns over the last few months and may actually be approaching a breakup point.

Fateh Sports Wear

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fateh Sports Wear are ranked lower than 40 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fateh Sports sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Al Khair and Fateh Sports

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

The idea behind Al Khair Gadoon Limited and Fateh Sports Wear 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.