Correlation Between El Ahli and Arab Moltaka
Can any of the company-specific risk be diversified away by investing in both El Ahli and Arab Moltaka 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 El Ahli and Arab Moltaka into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Ahli Investment and Arab Moltaka Investments, you can compare the effects of market volatilities on El Ahli and Arab Moltaka 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 El Ahli with a short position of Arab Moltaka. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Ahli and Arab Moltaka.
Diversification Opportunities for El Ahli and Arab Moltaka
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AFDI and Arab is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding El Ahli Investment and Arab Moltaka Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arab Moltaka Investments and El Ahli 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 El Ahli Investment are associated (or correlated) with Arab Moltaka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arab Moltaka Investments has no effect on the direction of El Ahli i.e., El Ahli and Arab Moltaka go up and down completely randomly.
Pair Corralation between El Ahli and Arab Moltaka
Assuming the 90 days trading horizon El Ahli Investment is expected to generate 1.32 times more return on investment than Arab Moltaka. However, El Ahli is 1.32 times more volatile than Arab Moltaka Investments. It trades about 0.05 of its potential returns per unit of risk. Arab Moltaka Investments is currently generating about 0.05 per unit of risk. If you would invest 1,844 in El Ahli Investment on October 12, 2024 and sell it today you would earn a total of 1,127 from holding El Ahli Investment or generate 61.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 79.22% |
| Values | Daily Returns |
El Ahli Investment vs. Arab Moltaka Investments
Performance |
| Timeline |
| El Ahli Investment |
| Arab Moltaka Investments |
El Ahli and Arab Moltaka Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Ahli and Arab Moltaka
The main advantage of trading using opposite El Ahli and Arab Moltaka positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Ahli position performs unexpectedly, Arab Moltaka 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 Arab Moltaka will offset losses from the drop in Arab Moltaka's long position.| El Ahli vs. Al Arafa Investment | El Ahli vs. Cairo For Investment | El Ahli vs. Natural Gas Mining | El Ahli vs. Inter Cairo For Aluminum |
| Arab Moltaka vs. Al Arafa Investment | Arab Moltaka vs. Saudi Egyptian Investment | Arab Moltaka vs. El Nasr Clothes | Arab Moltaka vs. El Ahli 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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