Correlation Between Al Tawfeek and Orascom Financial
Can any of the company-specific risk be diversified away by investing in both Al Tawfeek and Orascom 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 Al Tawfeek and Orascom Financial 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 Orascom Financial Holding, you can compare the effects of market volatilities on Al Tawfeek and Orascom 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 Al Tawfeek with a short position of Orascom Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Tawfeek and Orascom Financial.
Diversification Opportunities for Al Tawfeek and Orascom Financial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ATLC and Orascom is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Al Tawfeek Leasing and Orascom Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orascom Financial Holding 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 Orascom Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orascom Financial Holding has no effect on the direction of Al Tawfeek i.e., Al Tawfeek and Orascom Financial go up and down completely randomly.
Pair Corralation between Al Tawfeek and Orascom Financial
Assuming the 90 days trading horizon Al Tawfeek is expected to generate 1.21 times less return on investment than Orascom Financial. But when comparing it to its historical volatility, Al Tawfeek Leasing is 1.34 times less risky than Orascom Financial. It trades about 0.09 of its potential returns per unit of risk. Orascom Financial Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 34.00 in Orascom Financial Holding on August 28, 2024 and sell it today you would earn a total of 4.00 from holding Orascom Financial Holding or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.08% |
| Values | Daily Returns |
Al Tawfeek Leasing vs. Orascom Financial Holding
Performance |
| Timeline |
| Al Tawfeek Leasing |
| Orascom Financial Holding |
Al Tawfeek and Orascom Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Al Tawfeek and Orascom Financial
The main advantage of trading using opposite Al Tawfeek and Orascom Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Tawfeek position performs unexpectedly, Orascom 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 Orascom Financial will offset losses from the drop in Orascom Financial's long position.| Al Tawfeek vs. Paint Chemicals Industries | Al Tawfeek vs. Egyptians For Investment | Al Tawfeek vs. Misr Oils Soap | Al Tawfeek vs. Global Telecom Holding |
| Orascom Financial vs. Fawry For Banking | Orascom Financial vs. Misr Chemical Industries | Orascom Financial vs. National Bank | Orascom Financial vs. Misr National Steel |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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