Correlation Between Cairo For and Qatar Natl
Can any of the company-specific risk be diversified away by investing in both Cairo For and Qatar Natl 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 Cairo For and Qatar Natl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairo For Investment and Qatar Natl Bank, you can compare the effects of market volatilities on Cairo For and Qatar Natl 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 Cairo For with a short position of Qatar Natl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo For and Qatar Natl.
Diversification Opportunities for Cairo For and Qatar Natl
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cairo and Qatar is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cairo For Investment and Qatar Natl Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qatar Natl Bank and Cairo For 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 Cairo For Investment are associated (or correlated) with Qatar Natl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qatar Natl Bank has no effect on the direction of Cairo For i.e., Cairo For and Qatar Natl go up and down completely randomly.
Pair Corralation between Cairo For and Qatar Natl
Assuming the 90 days trading horizon Cairo For Investment is expected to under-perform the Qatar Natl. But the stock apears to be less risky and, when comparing its historical volatility, Cairo For Investment is 2.42 times less risky than Qatar Natl. The stock trades about -0.19 of its potential returns per unit of risk. The Qatar Natl Bank is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,228 in Qatar Natl Bank on September 2, 2024 and sell it today you would earn a total of 242.00 from holding Qatar Natl Bank or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo For Investment vs. Qatar Natl Bank
Performance |
| Timeline |
| Cairo For Investment |
| Qatar Natl Bank |
Cairo For and Qatar Natl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo For and Qatar Natl
The main advantage of trading using opposite Cairo For and Qatar Natl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo For position performs unexpectedly, Qatar Natl 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 Qatar Natl will offset losses from the drop in Qatar Natl's long position.| Cairo For vs. Egyptians For Investment | Cairo For vs. Misr Oils Soap | Cairo For vs. Global Telecom Holding | Cairo For vs. Qatar Natl Bank |
| Qatar Natl vs. Egyptians For Investment | Qatar Natl vs. Misr Oils Soap | Qatar Natl vs. Global Telecom Holding | Qatar Natl vs. Orascom Construction PLC |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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