Correlation Between Contact Financial and Egyptian Gulf
Can any of the company-specific risk be diversified away by investing in both Contact Financial and Egyptian Gulf 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 Egyptian Gulf 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 Egyptian Gulf Bank, you can compare the effects of market volatilities on Contact Financial and Egyptian Gulf 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 Egyptian Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contact Financial and Egyptian Gulf.
Diversification Opportunities for Contact Financial and Egyptian Gulf
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Contact and Egyptian is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Contact Financial Holding and Egyptian Gulf Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Gulf Bank 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 Egyptian Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Gulf Bank has no effect on the direction of Contact Financial i.e., Contact Financial and Egyptian Gulf go up and down completely randomly.
Pair Corralation between Contact Financial and Egyptian Gulf
Assuming the 90 days trading horizon Contact Financial Holding is expected to under-perform the Egyptian Gulf. In addition to that, Contact Financial is 1.2 times more volatile than Egyptian Gulf Bank. It trades about -0.22 of its total potential returns per unit of risk. Egyptian Gulf Bank is currently generating about 0.15 per unit of volatility. If you would invest 27.00 in Egyptian Gulf Bank on November 5, 2024 and sell it today you would earn a total of 1.00 from holding Egyptian Gulf Bank or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Contact Financial Holding vs. Egyptian Gulf Bank
Performance |
| Timeline |
| Contact Financial Holding |
| Egyptian Gulf Bank |
Contact Financial and Egyptian Gulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Contact Financial and Egyptian Gulf
The main advantage of trading using opposite Contact Financial and Egyptian Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contact Financial position performs unexpectedly, Egyptian Gulf 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 Egyptian Gulf will offset losses from the drop in Egyptian Gulf's long position.| Contact Financial vs. Atlas For Investment | Contact Financial vs. Nile City Investment | Contact Financial vs. Grand Investment Capital | Contact Financial vs. Arab Aluminum |
| Egyptian Gulf vs. Paint Chemicals Industries | Egyptian Gulf vs. Reacap Financial Investments | Egyptian Gulf vs. Egyptians For Investment | Egyptian Gulf vs. Misr Oils Soap |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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