Correlation Between Arab Aluminum and Orascom Construction
Can any of the company-specific risk be diversified away by investing in both Arab Aluminum and Orascom Construction 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 Orascom Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arab Aluminum and Orascom Construction PLC, you can compare the effects of market volatilities on Arab Aluminum and Orascom Construction 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 Orascom Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arab Aluminum and Orascom Construction.
Diversification Opportunities for Arab Aluminum and Orascom Construction
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arab and Orascom is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Arab Aluminum and Orascom Construction PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orascom Construction PLC 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 Orascom Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orascom Construction PLC has no effect on the direction of Arab Aluminum i.e., Arab Aluminum and Orascom Construction go up and down completely randomly.
Pair Corralation between Arab Aluminum and Orascom Construction
Assuming the 90 days trading horizon Arab Aluminum is expected to generate 1.03 times more return on investment than Orascom Construction. However, Arab Aluminum is 1.03 times more volatile than Orascom Construction PLC. It trades about -0.2 of its potential returns per unit of risk. Orascom Construction PLC is currently generating about -0.26 per unit of risk. If you would invest 1,474 in Arab Aluminum on October 13, 2024 and sell it today you would lose (70.00) from holding Arab Aluminum or give up 4.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arab Aluminum vs. Orascom Construction PLC
Performance |
| Timeline |
| Arab Aluminum |
| Orascom Construction PLC |
Arab Aluminum and Orascom Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arab Aluminum and Orascom Construction
The main advantage of trading using opposite Arab Aluminum and Orascom Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arab Aluminum position performs unexpectedly, Orascom Construction 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 Orascom Construction will offset losses from the drop in Orascom Construction's long position.| Arab Aluminum vs. Paint Chemicals Industries | Arab Aluminum vs. Reacap Financial Investments | Arab Aluminum vs. Egyptians For Investment | Arab Aluminum vs. Misr Oils Soap |
| Orascom Construction vs. Arab Aluminum | Orascom Construction vs. Assiut Islamic Trading | Orascom Construction vs. Misr Chemical Industries | Orascom Construction 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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