Correlation Between Qatar Natl and Egyptian Chemical

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Qatar Natl and Egyptian Chemical 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 Qatar Natl and Egyptian Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qatar Natl Bank and Egyptian Chemical Industries, you can compare the effects of market volatilities on Qatar Natl and Egyptian Chemical 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 Qatar Natl with a short position of Egyptian Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qatar Natl and Egyptian Chemical.

Diversification Opportunities for Qatar Natl and Egyptian Chemical

-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Qatar and Egyptian is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Qatar Natl Bank and Egyptian Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Chemical and Qatar Natl 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 Qatar Natl Bank are associated (or correlated) with Egyptian Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Chemical has no effect on the direction of Qatar Natl i.e., Qatar Natl and Egyptian Chemical go up and down completely randomly.

Pair Corralation between Qatar Natl and Egyptian Chemical

Assuming the 90 days trading horizon Qatar Natl Bank is expected to generate 1.55 times more return on investment than Egyptian Chemical. However, Qatar Natl is 1.55 times more volatile than Egyptian Chemical Industries. It trades about 0.21 of its potential returns per unit of risk. Egyptian Chemical Industries is currently generating about -0.12 per unit of risk. If you would invest  2,724  in Qatar Natl Bank on September 5, 2024 and sell it today you would earn a total of  726.00  from holding Qatar Natl Bank or generate 26.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Qatar Natl Bank  vs.  Egyptian Chemical Industries

 Performance 
       Timeline  
Qatar Natl Bank 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Qatar Natl Bank are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Qatar Natl reported solid returns over the last few months and may actually be approaching a breakup point.
Egyptian Chemical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Egyptian Chemical Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Qatar Natl and Egyptian Chemical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Qatar Natl and Egyptian Chemical

The main advantage of trading using opposite Qatar Natl and Egyptian Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qatar Natl position performs unexpectedly, Egyptian Chemical 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 Egyptian Chemical will offset losses from the drop in Egyptian Chemical's long position.
The idea behind Qatar Natl Bank and Egyptian Chemical Industries 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

Other Complementary Tools

Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets