Correlation Between Egyptians For and Al Khair

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

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

Diversification Opportunities for Egyptians For and Al Khair

0.53

Correlation Coefficient

Egyptians For  Al Khair

Very weak diversification

The 3 months correlation between Egyptians and KRDI is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Egyptians For Investment and Al Khair River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Khair River and Egyptians 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 Egyptians For Investment are associated (or correlated) with Al Khair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Khair River has no effect on the direction of Egyptians For i.e., Egyptians For and Al Khair go up and down completely randomly.

Pair Corralation between Egyptians For and Al Khair

Assuming the 90 days trading horizon Egyptians For Investment is expected to generate 12.66 times more return on investment than Al Khair. However, Egyptians For is 12.66 times more volatile than Al Khair River. It trades about 0.04 of its potential returns per unit of risk. Al Khair River is currently generating about 0.07 per unit of risk. If you would invest  1,207  in Egyptians For Investment on September 16, 2024 and sell it today you would lose (1,183) from holding Egyptians For Investment or give up 98.01% of portfolio value over 90 days.

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

Egyptians For Investment  vs.  Al Khair River

Egyptians For Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Egyptians For Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Egyptians For reported solid returns over the last few months and may actually be approaching a breakup point.

Al Khair River

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Al Khair River are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Al Khair reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Egyptians For and Al Khair

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

The idea behind Egyptians For Investment and Al Khair River 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.