Correlation Between Nile City and Cairo Oils

Can any of the company-specific risk be diversified away by investing in both Nile City and Cairo Oils 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 Nile City and Cairo Oils into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nile City Investment and Cairo Oils Soap, you can compare the effects of market volatilities on Nile City and Cairo Oils 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 Nile City with a short position of Cairo Oils. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nile City and Cairo Oils.

Diversification Opportunities for Nile City and Cairo Oils

0.0

Correlation Coefficient

Nile City  Cairo Oils

Pay attention - limited upside

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

Pair Corralation between Nile City and Cairo Oils

If you would invest  16.00  in Cairo Oils Soap on September 18, 2024 and sell it today you would earn a total of  11.00  from holding Cairo Oils Soap or generate 68.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.74%
Values	Daily Returns

Nile City Investment  vs.  Cairo Oils Soap

Nile City Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cairo Oils Soap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cairo Oils Soap are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Cairo Oils reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nile City and Cairo Oils

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

The idea behind Nile City Investment and Cairo Oils Soap 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.