Correlation Between National CineMedia and Anghami Warrants

Can any of the company-specific risk be diversified away by investing in both National CineMedia and Anghami Warrants 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 National CineMedia and Anghami Warrants into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National CineMedia and Anghami Warrants, you can compare the effects of market volatilities on National CineMedia and Anghami Warrants 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 National CineMedia with a short position of Anghami Warrants. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Anghami Warrants.

Diversification Opportunities for National CineMedia and Anghami Warrants

-0.58

Correlation Coefficient

National CineMedia  Anghami Warrants

Excellent diversification

The 3 months correlation between National and Anghami is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Anghami Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anghami Warrants and National CineMedia 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 National CineMedia are associated (or correlated) with Anghami Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anghami Warrants has no effect on the direction of National CineMedia i.e., National CineMedia and Anghami Warrants go up and down completely randomly.

Pair Corralation between National CineMedia and Anghami Warrants

Given the investment horizon of 90 days National CineMedia is expected to generate 86.72 times less return on investment than Anghami Warrants. But when comparing it to its historical volatility, National CineMedia is 47.11 times less risky than Anghami Warrants. It trades about 0.08 of its potential returns per unit of risk. Anghami Warrants is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  5.51  in Anghami Warrants on July 9, 2024 and sell it today you would lose (3.51) from holding Anghami Warrants or give up 63.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	63.98%
Values	Daily Returns

National CineMedia  vs.  Anghami Warrants

National CineMedia

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in National CineMedia are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting primary indicators, National CineMedia demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Anghami Warrants

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Anghami Warrants are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical indicators, Anghami Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National CineMedia and Anghami Warrants

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

The idea behind National CineMedia and Anghami Warrants 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.