Correlation Between Egyptian Transport and International Agricultural

Can any of the company-specific risk be diversified away by investing in both Egyptian Transport and International Agricultural 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 Egyptian Transport and International Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Egyptian Transport and International Agricultural Products, you can compare the effects of market volatilities on Egyptian Transport and International Agricultural 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 Egyptian Transport with a short position of International Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Transport and International Agricultural.

Diversification Opportunities for Egyptian Transport and International Agricultural

0.74

Correlation Coefficient

Egyptian Transport  International Agricultural

Poor diversification

The 3 months correlation between Egyptian and International is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Transport and International Agricultural Pro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Agricultural and Egyptian Transport 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 Egyptian Transport are associated (or correlated) with International Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Agricultural has no effect on the direction of Egyptian Transport i.e., Egyptian Transport and International Agricultural go up and down completely randomly.

Pair Corralation between Egyptian Transport and International Agricultural

Assuming the 90 days trading horizon Egyptian Transport is expected to generate 1.53 times more return on investment than International Agricultural. However, Egyptian Transport is 1.53 times more volatile than International Agricultural Products. It trades about 0.19 of its potential returns per unit of risk. International Agricultural Products is currently generating about 0.16 per unit of risk. If you would invest  424.00  in Egyptian Transport on September 24, 2024 and sell it today you would earn a total of  151.00  from holding Egyptian Transport or generate 35.61% return on investment over 90 days.

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

Egyptian Transport  vs.  International Agricultural Pro

Egyptian Transport

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Egyptian Transport are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Egyptian Transport reported solid returns over the last few months and may actually be approaching a breakup point.

International Agricultural

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Agricultural Products are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, International Agricultural reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Egyptian Transport and International Agricultural

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

The idea behind Egyptian Transport and International Agricultural Products 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.