Correlation Between Cairo Oils and Sharkia National
Can any of the company-specific risk be diversified away by investing in both Cairo Oils and Sharkia 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 Sharkia 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 Sharkia National Food, you can compare the effects of market volatilities on Cairo Oils and Sharkia 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 Sharkia National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Oils and Sharkia National.
Diversification Opportunities for Cairo Oils and Sharkia National
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cairo and Sharkia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Oils Soap and Sharkia National Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharkia 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 Sharkia National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharkia National Food has no effect on the direction of Cairo Oils i.e., Cairo Oils and Sharkia National go up and down completely randomly.
Pair Corralation between Cairo Oils and Sharkia National
Assuming the 90 days trading horizon Cairo Oils is expected to generate 4.06 times less return on investment than Sharkia National. But when comparing it to its historical volatility, Cairo Oils Soap is 1.06 times less risky than Sharkia National. It trades about 0.09 of its potential returns per unit of risk. Sharkia National Food is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 297.00 in Sharkia National Food on August 30, 2024 and sell it today you would earn a total of 132.00 from holding Sharkia National Food or generate 44.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Oils Soap vs. Sharkia National Food
Performance |
| Timeline |
| Cairo Oils Soap |
| Sharkia National Food |
Cairo Oils and Sharkia National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Oils and Sharkia National
The main advantage of trading using opposite Cairo Oils and Sharkia National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Oils position performs unexpectedly, Sharkia 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 Sharkia National will offset losses from the drop in Sharkia National's long position.| Cairo Oils vs. Paint Chemicals Industries | Cairo Oils vs. Misr Oils Soap | Cairo Oils vs. Global Telecom Holding | Cairo Oils vs. Qatar Natl Bank |
| Sharkia National vs. Paint Chemicals Industries | Sharkia National vs. Misr Oils Soap | Sharkia National vs. Global Telecom Holding | Sharkia National vs. Qatar Natl Bank |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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