Correlation Between Arab Moltaka and General Silos
Can any of the company-specific risk be diversified away by investing in both Arab Moltaka and General Silos 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 Arab Moltaka and General Silos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arab Moltaka Investments and General Silos Storage, you can compare the effects of market volatilities on Arab Moltaka and General Silos 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 Arab Moltaka with a short position of General Silos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arab Moltaka and General Silos.
Diversification Opportunities for Arab Moltaka and General Silos
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arab and General is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Arab Moltaka Investments and General Silos Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Silos Storage and Arab Moltaka 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 Arab Moltaka Investments are associated (or correlated) with General Silos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Silos Storage has no effect on the direction of Arab Moltaka i.e., Arab Moltaka and General Silos go up and down completely randomly.
Pair Corralation between Arab Moltaka and General Silos
Assuming the 90 days trading horizon Arab Moltaka Investments is expected to generate 0.62 times more return on investment than General Silos. However, Arab Moltaka Investments is 1.61 times less risky than General Silos. It trades about -0.1 of its potential returns per unit of risk. General Silos Storage is currently generating about -0.34 per unit of risk. If you would invest 284.00 in Arab Moltaka Investments on September 12, 2024 and sell it today you would lose (14.00) from holding Arab Moltaka Investments or give up 4.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arab Moltaka Investments vs. General Silos Storage
Performance |
| Timeline |
| Arab Moltaka Investments |
| General Silos Storage |
Arab Moltaka and General Silos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arab Moltaka and General Silos
The main advantage of trading using opposite Arab Moltaka and General Silos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arab Moltaka position performs unexpectedly, General Silos 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 General Silos will offset losses from the drop in General Silos' long position.| Arab Moltaka vs. Paint Chemicals Industries | Arab Moltaka vs. Reacap Financial Investments | Arab Moltaka vs. Egyptians For Investment | Arab Moltaka vs. Misr Oils Soap |
| General Silos vs. Arabian Food Industries | General Silos vs. Egyptian Gulf Bank | General Silos vs. Egypt Aluminum | General Silos vs. Cairo Oils Soap |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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