Correlation Between Egypt Aluminum and Orascom Investment
Can any of the company-specific risk be diversified away by investing in both Egypt Aluminum and Orascom Investment 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 Orascom Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Egypt Aluminum and Orascom Investment Holding, you can compare the effects of market volatilities on Egypt Aluminum and Orascom Investment 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 Orascom Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egypt Aluminum and Orascom Investment.
Diversification Opportunities for Egypt Aluminum and Orascom Investment
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Egypt and Orascom is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Egypt Aluminum and Orascom Investment Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orascom Investment 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 Orascom Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orascom Investment has no effect on the direction of Egypt Aluminum i.e., Egypt Aluminum and Orascom Investment go up and down completely randomly.
Pair Corralation between Egypt Aluminum and Orascom Investment
Assuming the 90 days trading horizon Egypt Aluminum is expected to generate 1.21 times more return on investment than Orascom Investment. However, Egypt Aluminum is 1.21 times more volatile than Orascom Investment Holding. It trades about 0.49 of its potential returns per unit of risk. Orascom Investment Holding is currently generating about 0.02 per unit of risk. If you would invest 11,736 in Egypt Aluminum on October 24, 2024 and sell it today you would earn a total of 4,170 from holding Egypt Aluminum or generate 35.53% 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. Orascom Investment Holding
Performance |
| Timeline |
| Egypt Aluminum |
| Orascom Investment |
Egypt Aluminum and Orascom Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egypt Aluminum and Orascom Investment
The main advantage of trading using opposite Egypt Aluminum and Orascom Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egypt Aluminum position performs unexpectedly, Orascom Investment 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 Orascom Investment will offset losses from the drop in Orascom Investment's long position.| Egypt Aluminum vs. Telecom Egypt | Egypt Aluminum vs. International Agricultural Products | Egypt Aluminum vs. Nozha International Hospital | Egypt Aluminum vs. Industrial Engineering Projects |
| Orascom Investment vs. Commercial International Bank Egypt | Orascom Investment vs. Golden Textiles Clothes | Orascom Investment vs. Ezz Steel | Orascom Investment vs. Export Development 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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