Correlation Between Egypt Aluminum and Medical Packaging
Can any of the company-specific risk be diversified away by investing in both Egypt Aluminum and Medical Packaging 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 Medical Packaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Egypt Aluminum and Medical Packaging, you can compare the effects of market volatilities on Egypt Aluminum and Medical Packaging 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 Medical Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egypt Aluminum and Medical Packaging.
Diversification Opportunities for Egypt Aluminum and Medical Packaging
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Egypt and Medical is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Egypt Aluminum and Medical Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Packaging 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 Medical Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Packaging has no effect on the direction of Egypt Aluminum i.e., Egypt Aluminum and Medical Packaging go up and down completely randomly.
Pair Corralation between Egypt Aluminum and Medical Packaging
Assuming the 90 days trading horizon Egypt Aluminum is expected to generate 0.57 times more return on investment than Medical Packaging. However, Egypt Aluminum is 1.77 times less risky than Medical Packaging. It trades about 0.26 of its potential returns per unit of risk. Medical Packaging is currently generating about 0.01 per unit of risk. If you would invest 10,689 in Egypt Aluminum on September 20, 2024 and sell it today you would earn a total of 820.00 from holding Egypt Aluminum or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egypt Aluminum vs. Medical Packaging
Performance |
| Timeline |
| Egypt Aluminum |
| Medical Packaging |
Egypt Aluminum and Medical Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egypt Aluminum and Medical Packaging
The main advantage of trading using opposite Egypt Aluminum and Medical Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egypt Aluminum position performs unexpectedly, Medical Packaging 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 Medical Packaging will offset losses from the drop in Medical Packaging's long position.| Egypt Aluminum vs. Paint Chemicals Industries | Egypt Aluminum vs. Reacap Financial Investments | Egypt Aluminum vs. Egyptians For Investment | Egypt Aluminum vs. Misr Oils Soap |
| Medical Packaging vs. Paint Chemicals Industries | Medical Packaging vs. Reacap Financial Investments | Medical Packaging vs. Egyptians For Investment | Medical Packaging 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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