Correlation Between Industrial Engineering and Orascom Investment

Can any of the company-specific risk be diversified away by investing in both Industrial Engineering and Orascom Investment 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 Industrial Engineering and Orascom Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Industrial Engineering Projects and Orascom Investment Holding, you can compare the effects of market volatilities on Industrial Engineering and Orascom Investment 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 Industrial Engineering with a short position of Orascom Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Engineering and Orascom Investment.

Diversification Opportunities for Industrial Engineering and Orascom Investment

0.45

Correlation Coefficient

Industrial Engineering  Orascom Investment

Very weak diversification

The 3 months correlation between Industrial and Orascom is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Engineering Project and Orascom Investment Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orascom Investment and Industrial Engineering 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 Industrial Engineering Projects are associated (or correlated) with Orascom Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orascom Investment has no effect on the direction of Industrial Engineering i.e., Industrial Engineering and Orascom Investment go up and down completely randomly.

Pair Corralation between Industrial Engineering and Orascom Investment

Assuming the 90 days trading horizon Industrial Engineering is expected to generate 17.41 times less return on investment than Orascom Investment. But when comparing it to its historical volatility, Industrial Engineering Projects is 1.26 times less risky than Orascom Investment. It trades about 0.01 of its potential returns per unit of risk. Orascom Investment Holding is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  41.00  in Orascom Investment Holding on September 13, 2024 and sell it today you would earn a total of  9.00  from holding Orascom Investment Holding or generate 21.95% return on investment over 90 days.

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

Industrial Engineering Project  vs.  Orascom Investment Holding

Industrial Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrial Engineering Projects has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Industrial Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Orascom Investment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orascom Investment Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Orascom Investment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Industrial Engineering and Orascom Investment

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

The idea behind Industrial Engineering Projects and Orascom Investment Holding 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.