Correlation Between Egyptian Iron and Al Arafa

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

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

Diversification Opportunities for Egyptian Iron and Al Arafa

0.0

Correlation Coefficient

Egyptian Iron  Al Arafa

Pay attention - limited upside

The 3 months correlation between Egyptian and AIVCB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Iron Steel and Al Arafa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Arafa Investment and Egyptian Iron 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 Iron Steel are associated (or correlated) with Al Arafa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Arafa Investment has no effect on the direction of Egyptian Iron i.e., Egyptian Iron and Al Arafa go up and down completely randomly.

Pair Corralation between Egyptian Iron and Al Arafa

If you would invest  4,042  in Egyptian Iron Steel on September 2, 2024 and sell it today you would earn a total of  1,117  from holding Egyptian Iron Steel or generate 27.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Egyptian Iron Steel  vs.  Al Arafa Investment

Egyptian Iron Steel

Risk-Adjusted Performance

10 of 100

OK

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

Al Arafa Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Al Arafa Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Al Arafa is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Egyptian Iron and Al Arafa

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

The idea behind Egyptian Iron Steel and Al Arafa Investment 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.