Correlation Between El Ahli and Contact Financial
Can any of the company-specific risk be diversified away by investing in both El Ahli and Contact Financial 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 Contact Financial 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 Contact Financial Holding, you can compare the effects of market volatilities on El Ahli and Contact Financial 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 Contact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Ahli and Contact Financial.
Diversification Opportunities for El Ahli and Contact Financial
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AFDI and Contact is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding El Ahli Investment and Contact Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contact Financial Holding 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 Contact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contact Financial Holding has no effect on the direction of El Ahli i.e., El Ahli and Contact Financial go up and down completely randomly.
Pair Corralation between El Ahli and Contact Financial
Assuming the 90 days trading horizon El Ahli Investment is expected to under-perform the Contact Financial. But the stock apears to be less risky and, when comparing its historical volatility, El Ahli Investment is 1.16 times less risky than Contact Financial. The stock trades about -0.11 of its potential returns per unit of risk. The Contact Financial Holding is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 445.00 in Contact Financial Holding on October 24, 2024 and sell it today you would earn a total of 4.00 from holding Contact Financial Holding or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Ahli Investment vs. Contact Financial Holding
Performance |
| Timeline |
| El Ahli Investment |
| Contact Financial Holding |
El Ahli and Contact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Ahli and Contact Financial
The main advantage of trading using opposite El Ahli and Contact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Ahli position performs unexpectedly, Contact Financial 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 Contact Financial will offset losses from the drop in Contact Financial's long position.| El Ahli vs. Telecom Egypt | El Ahli vs. International Agricultural Products | El Ahli vs. Nozha International Hospital | El Ahli vs. Industrial Engineering Projects |
| Contact Financial vs. Natural Gas Mining | Contact Financial vs. El Ahli Investment | Contact Financial vs. ODIN Investments | Contact Financial vs. Grand Investment Capital |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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