Correlation Between Al Tawfeek and El Nasr
Can any of the company-specific risk be diversified away by investing in both Al Tawfeek and El Nasr 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 Al Tawfeek and El Nasr into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Al Tawfeek Leasing and El Nasr Clothes, you can compare the effects of market volatilities on Al Tawfeek and El Nasr 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 Al Tawfeek with a short position of El Nasr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Tawfeek and El Nasr.
Diversification Opportunities for Al Tawfeek and El Nasr
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ATLC and KABO is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Al Tawfeek Leasing and El Nasr Clothes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Nasr Clothes and Al Tawfeek 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 Al Tawfeek Leasing are associated (or correlated) with El Nasr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Nasr Clothes has no effect on the direction of Al Tawfeek i.e., Al Tawfeek and El Nasr go up and down completely randomly.
Pair Corralation between Al Tawfeek and El Nasr
Assuming the 90 days trading horizon Al Tawfeek is expected to generate 3.97 times less return on investment than El Nasr. But when comparing it to its historical volatility, Al Tawfeek Leasing is 1.12 times less risky than El Nasr. It trades about 0.02 of its potential returns per unit of risk. El Nasr Clothes is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 196.00 in El Nasr Clothes on September 13, 2024 and sell it today you would earn a total of 200.00 from holding El Nasr Clothes or generate 102.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Al Tawfeek Leasing vs. El Nasr Clothes
Performance |
| Timeline |
| Al Tawfeek Leasing |
| El Nasr Clothes |
Al Tawfeek and El Nasr Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Al Tawfeek and El Nasr
The main advantage of trading using opposite Al Tawfeek and El Nasr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Tawfeek position performs unexpectedly, El Nasr 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 El Nasr will offset losses from the drop in El Nasr's long position.| Al Tawfeek vs. Paint Chemicals Industries | Al Tawfeek vs. Reacap Financial Investments | Al Tawfeek vs. Egyptians For Investment | Al Tawfeek vs. Misr Oils Soap |
| El Nasr vs. Egyptian Transport | El Nasr vs. Global Telecom Holding | El Nasr vs. Misr Financial Investments | El Nasr vs. Cairo For 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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