Correlation Between Arab Aluminum and Egyptian Gulf
Can any of the company-specific risk be diversified away by investing in both Arab Aluminum 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 Arab Aluminum and Egyptian Gulf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arab Aluminum and Egyptian Gulf Bank, you can compare the effects of market volatilities on Arab Aluminum 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 Arab Aluminum with a short position of Egyptian Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arab Aluminum and Egyptian Gulf.
Diversification Opportunities for Arab Aluminum and Egyptian Gulf
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arab and Egyptian is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Arab Aluminum 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 Arab Aluminum 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 Aluminum 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 Arab Aluminum i.e., Arab Aluminum and Egyptian Gulf go up and down completely randomly.
Pair Corralation between Arab Aluminum and Egyptian Gulf
Assuming the 90 days trading horizon Arab Aluminum is expected to generate 2.19 times more return on investment than Egyptian Gulf. However, Arab Aluminum is 2.19 times more volatile than Egyptian Gulf Bank. It trades about 0.06 of its potential returns per unit of risk. Egyptian Gulf Bank is currently generating about 0.1 per unit of risk. If you would invest 1,386 in Arab Aluminum on October 26, 2024 and sell it today you would earn a total of 57.00 from holding Arab Aluminum or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arab Aluminum vs. Egyptian Gulf Bank
Performance |
| Timeline |
| Arab Aluminum |
| Egyptian Gulf Bank |
Arab Aluminum and Egyptian Gulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arab Aluminum and Egyptian Gulf
The main advantage of trading using opposite Arab Aluminum and Egyptian Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arab Aluminum 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.| Arab Aluminum vs. Iron And Steel | Arab Aluminum vs. Al Khair River | Arab Aluminum vs. Misr Hotels | Arab Aluminum vs. Industrial Engineering Projects |
| Egyptian Gulf vs. Contact Financial Holding | Egyptian Gulf vs. Arab Aluminum | Egyptian Gulf vs. QALA For Financial | Egyptian Gulf vs. Act Financial |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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