Correlation Between Arabian Food and El Nasr
Can any of the company-specific risk be diversified away by investing in both Arabian Food and El Nasr 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 Arabian Food and El Nasr into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arabian Food Industries and El Nasr Clothes, you can compare the effects of market volatilities on Arabian Food and El Nasr 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 Arabian Food with a short position of El Nasr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arabian Food and El Nasr.
Diversification Opportunities for Arabian Food and El Nasr
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arabian and KABO is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Arabian Food Industries and El Nasr Clothes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Nasr Clothes and Arabian Food 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 Arabian Food Industries are associated (or correlated) with El Nasr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Nasr Clothes has no effect on the direction of Arabian Food i.e., Arabian Food and El Nasr go up and down completely randomly.
Pair Corralation between Arabian Food and El Nasr
Assuming the 90 days trading horizon Arabian Food Industries is expected to generate 1.33 times more return on investment than El Nasr. However, Arabian Food is 1.33 times more volatile than El Nasr Clothes. It trades about 0.27 of its potential returns per unit of risk. El Nasr Clothes is currently generating about 0.22 per unit of risk. If you would invest 1,470 in Arabian Food Industries on September 12, 2024 and sell it today you would earn a total of 1,237 from holding Arabian Food Industries or generate 84.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arabian Food Industries vs. El Nasr Clothes
Performance |
| Timeline |
| Arabian Food Industries |
| El Nasr Clothes |
Arabian Food and El Nasr Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arabian Food and El Nasr
The main advantage of trading using opposite Arabian Food and El Nasr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arabian Food position performs unexpectedly, El Nasr 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 El Nasr will offset losses from the drop in El Nasr's long position.| Arabian Food vs. The Arab Dairy | Arabian Food vs. Sharkia National Food | Arabian Food vs. Cairo For Investment | Arabian Food vs. Al Arafa Investment |
| El Nasr vs. Egyptian Transport | El Nasr vs. Global Telecom Holding | El Nasr vs. Misr Financial Investments | El Nasr vs. Cairo For Investment |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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