Correlation Between Shemen Industries and Hamama

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

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

Diversification Opportunities for Shemen Industries and Hamama

-0.68

Correlation Coefficient

Shemen Industries  Hamama

Excellent diversification

The 3 months correlation between Shemen and Hamama is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shemen Industries and Hamama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamama and Shemen Industries 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 Shemen Industries are associated (or correlated) with Hamama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamama has no effect on the direction of Shemen Industries i.e., Shemen Industries and Hamama go up and down completely randomly.

Pair Corralation between Shemen Industries and Hamama

Assuming the 90 days trading horizon Shemen Industries is expected to generate 0.63 times more return on investment than Hamama. However, Shemen Industries is 1.59 times less risky than Hamama. It trades about 0.02 of its potential returns per unit of risk. Hamama is currently generating about 0.0 per unit of risk. If you would invest  166,800  in Shemen Industries on September 28, 2024 and sell it today you would earn a total of  12,500  from holding Shemen Industries or generate 7.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.74%
Values	Daily Returns

Shemen Industries  vs.  Hamama

Shemen Industries

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shemen Industries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Shemen Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hamama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hamama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Shemen Industries and Hamama

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

The idea behind Shemen Industries and Hamama 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..