Correlation Between Apple and Egyptian Gulf
Can any of the company-specific risk be diversified away by investing in both Apple and Egyptian Gulf 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 Apple and Egyptian Gulf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Egyptian Gulf Bank, you can compare the effects of market volatilities on Apple and Egyptian Gulf 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 Apple with a short position of Egyptian Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Egyptian Gulf.
Diversification Opportunities for Apple and Egyptian Gulf
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Apple and Egyptian is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Egyptian Gulf Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Gulf Bank and Apple 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 Apple Inc are associated (or correlated) with Egyptian Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Gulf Bank has no effect on the direction of Apple i.e., Apple and Egyptian Gulf go up and down completely randomly.
Pair Corralation between Apple and Egyptian Gulf
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Egyptian Gulf. In addition to that, Apple is 1.17 times more volatile than Egyptian Gulf Bank. It trades about -0.08 of its total potential returns per unit of risk. Egyptian Gulf Bank is currently generating about 0.15 per unit of volatility. If you would invest 27.00 in Egyptian Gulf Bank on November 3, 2024 and sell it today you would earn a total of 1.00 from holding Egyptian Gulf Bank or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Apple Inc vs. Egyptian Gulf Bank
Performance |
| Timeline |
| Apple Inc |
| Egyptian Gulf Bank |
Apple and Egyptian Gulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Egyptian Gulf
The main advantage of trading using opposite Apple and Egyptian Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Egyptian Gulf 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 Gulf will offset losses from the drop in Egyptian Gulf's long position.The idea behind Apple Inc and Egyptian Gulf Bank 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.| Egyptian Gulf vs. Orascom Financial Holding | Egyptian Gulf vs. Housing Development Bank | Egyptian Gulf vs. National Bank | Egyptian Gulf vs. Orascom Investment Holding |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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