Correlation Between Cairo For and Al Tawfeek
Can any of the company-specific risk be diversified away by investing in both Cairo For and Al Tawfeek 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 Cairo For and Al Tawfeek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairo For Investment and Al Tawfeek Leasing, you can compare the effects of market volatilities on Cairo For and Al Tawfeek 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 Cairo For with a short position of Al Tawfeek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo For and Al Tawfeek.
Diversification Opportunities for Cairo For and Al Tawfeek
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cairo and ATLC is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cairo For Investment and Al Tawfeek Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Tawfeek Leasing and Cairo For 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 Cairo For Investment are associated (or correlated) with Al Tawfeek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Tawfeek Leasing has no effect on the direction of Cairo For i.e., Cairo For and Al Tawfeek go up and down completely randomly.
Pair Corralation between Cairo For and Al Tawfeek
Assuming the 90 days trading horizon Cairo For is expected to generate 3.14 times less return on investment than Al Tawfeek. But when comparing it to its historical volatility, Cairo For Investment is 1.4 times less risky than Al Tawfeek. It trades about 0.06 of its potential returns per unit of risk. Al Tawfeek Leasing is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 395.00 in Al Tawfeek Leasing on September 15, 2024 and sell it today you would earn a total of 55.00 from holding Al Tawfeek Leasing or generate 13.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Cairo For Investment vs. Al Tawfeek Leasing
Performance |
Timeline |
Cairo For Investment |
Al Tawfeek Leasing |
Cairo For and Al Tawfeek Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cairo For and Al Tawfeek
The main advantage of trading using opposite Cairo For and Al Tawfeek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo For position performs unexpectedly, Al Tawfeek 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 Al Tawfeek will offset losses from the drop in Al Tawfeek's long position.Cairo For vs. Misr National Steel | ||
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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