Correlation Between Contact Financial and Arabia Investments
Can any of the company-specific risk be diversified away by investing in both Contact Financial and Arabia Investments 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 Contact Financial and Arabia Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Contact Financial Holding and Arabia Investments Holding, you can compare the effects of market volatilities on Contact Financial and Arabia Investments 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 Contact Financial with a short position of Arabia Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contact Financial and Arabia Investments.
Diversification Opportunities for Contact Financial and Arabia Investments
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Contact and Arabia is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Contact Financial Holding and Arabia Investments Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arabia Investments and Contact Financial 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 Contact Financial Holding are associated (or correlated) with Arabia Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arabia Investments has no effect on the direction of Contact Financial i.e., Contact Financial and Arabia Investments go up and down completely randomly.
Pair Corralation between Contact Financial and Arabia Investments
Assuming the 90 days trading horizon Contact Financial Holding is expected to generate 1.11 times more return on investment than Arabia Investments. However, Contact Financial is 1.11 times more volatile than Arabia Investments Holding. It trades about 0.05 of its potential returns per unit of risk. Arabia Investments Holding is currently generating about 0.05 per unit of risk. If you would invest 350.00 in Contact Financial Holding on August 31, 2024 and sell it today you would earn a total of 123.00 from holding Contact Financial Holding or generate 35.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.58% |
| Values | Daily Returns |
Contact Financial Holding vs. Arabia Investments Holding
Performance |
| Timeline |
| Contact Financial Holding |
| Arabia Investments |
Contact Financial and Arabia Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Contact Financial and Arabia Investments
The main advantage of trading using opposite Contact Financial and Arabia Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contact Financial position performs unexpectedly, Arabia Investments 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 Arabia Investments will offset losses from the drop in Arabia Investments' long position.| Contact Financial vs. Paint Chemicals Industries | Contact Financial vs. Reacap Financial Investments | Contact Financial vs. Egyptians For Investment | Contact Financial vs. Misr Oils Soap |
| Arabia Investments vs. Ismailia National Food | Arabia Investments vs. Misr Hotels | Arabia Investments vs. Taaleem Management Services | Arabia Investments vs. Misr Financial Investments |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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