Correlation Between Cairo Oils and Ismailia National
Can any of the company-specific risk be diversified away by investing in both Cairo Oils and Ismailia National 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 Oils and Ismailia National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairo Oils Soap and Ismailia National Food, you can compare the effects of market volatilities on Cairo Oils and Ismailia National 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 Oils with a short position of Ismailia National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Oils and Ismailia National.
Diversification Opportunities for Cairo Oils and Ismailia National
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cairo and Ismailia is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Oils Soap and Ismailia National Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ismailia National Food and Cairo Oils 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 Oils Soap are associated (or correlated) with Ismailia National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ismailia National Food has no effect on the direction of Cairo Oils i.e., Cairo Oils and Ismailia National go up and down completely randomly.
Pair Corralation between Cairo Oils and Ismailia National
Assuming the 90 days trading horizon Cairo Oils is expected to generate 20.57 times less return on investment than Ismailia National. But when comparing it to its historical volatility, Cairo Oils Soap is 1.05 times less risky than Ismailia National. It trades about 0.0 of its potential returns per unit of risk. Ismailia National Food is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6,622 in Ismailia National Food on September 12, 2024 and sell it today you would lose (112.00) from holding Ismailia National Food or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Oils Soap vs. Ismailia National Food
Performance |
| Timeline |
| Cairo Oils Soap |
| Ismailia National Food |
Cairo Oils and Ismailia National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Oils and Ismailia National
The main advantage of trading using opposite Cairo Oils and Ismailia National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Oils position performs unexpectedly, Ismailia National 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 Ismailia National will offset losses from the drop in Ismailia National's long position.| Cairo Oils vs. Arabian Food Industries | Cairo Oils vs. Speed Medical | Cairo Oils vs. Arabia Investments Holding | Cairo Oils vs. Edita Food Industries |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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