Correlation Between Extracted Oils and Arab Co

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

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

Diversification Opportunities for Extracted Oils and Arab Co

-0.14

Correlation Coefficient

Extracted Oils  Arab Co

Good diversification

The 3 months correlation between Extracted and Arab is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Extracted Oils and Arab Co for in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arab Co for and Extracted Oils 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 Extracted Oils are associated (or correlated) with Arab Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arab Co for has no effect on the direction of Extracted Oils i.e., Extracted Oils and Arab Co go up and down completely randomly.

Pair Corralation between Extracted Oils and Arab Co

Assuming the 90 days trading horizon Extracted Oils is expected to generate 1.5 times more return on investment than Arab Co. However, Extracted Oils is 1.5 times more volatile than Arab Co for. It trades about 0.07 of its potential returns per unit of risk. Arab Co for is currently generating about 0.01 per unit of risk. If you would invest  334.00  in Extracted Oils on April 22, 2025 and sell it today you would earn a total of  25.00  from holding Extracted Oils or generate 7.49% return on investment over 90 days.

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

Extracted Oils  vs.  Arab Co for

Extracted Oils

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Extracted Oils are ranked lower than 5 (%) 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.

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.

Pair Trading with Extracted Oils and Arab Co

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

The idea behind Extracted Oils and Arab Co for 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.