Correlation Between Egypt Aluminum and Egyptian Gulf
Can any of the company-specific risk be diversified away by investing in both Egypt Aluminum 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 Egypt Aluminum and Egyptian Gulf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Egypt Aluminum and Egyptian Gulf Bank, you can compare the effects of market volatilities on Egypt Aluminum 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 Egypt Aluminum with a short position of Egyptian Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egypt Aluminum and Egyptian Gulf.
Diversification Opportunities for Egypt Aluminum and Egyptian Gulf
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Egypt and Egyptian is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Egypt Aluminum 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 Egypt Aluminum 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 Egypt Aluminum 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 Egypt Aluminum i.e., Egypt Aluminum and Egyptian Gulf go up and down completely randomly.
Pair Corralation between Egypt Aluminum and Egyptian Gulf
Assuming the 90 days trading horizon Egypt Aluminum is expected to generate 2.67 times more return on investment than Egyptian Gulf. However, Egypt Aluminum is 2.67 times more volatile than Egyptian Gulf Bank. It trades about 0.42 of its potential returns per unit of risk. Egyptian Gulf Bank is currently generating about 0.15 per unit of risk. If you would invest 11,700 in Egypt Aluminum on November 4, 2024 and sell it today you would earn a total of 3,590 from holding Egypt Aluminum or generate 30.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egypt Aluminum vs. Egyptian Gulf Bank
Performance |
| Timeline |
| Egypt Aluminum |
| Egyptian Gulf Bank |
Egypt Aluminum and Egyptian Gulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egypt Aluminum and Egyptian Gulf
The main advantage of trading using opposite Egypt Aluminum and Egyptian Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egypt Aluminum 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.| Egypt Aluminum vs. Reacap Financial Investments | Egypt Aluminum vs. Inter Cairo For Aluminum | Egypt Aluminum vs. Arabia Investments Holding | Egypt Aluminum vs. Delta Construction Rebuilding |
| Egyptian Gulf vs. Orascom Financial Holding | Egyptian Gulf vs. Housing Development Bank | Egyptian Gulf vs. National Bank | Egyptian Gulf vs. Orascom Investment Holding |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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