Correlation Between Egypt Aluminum and United Bank
Can any of the company-specific risk be diversified away by investing in both Egypt Aluminum and United Bank 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 United Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Egypt Aluminum and The United Bank, you can compare the effects of market volatilities on Egypt Aluminum and United Bank 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 United Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egypt Aluminum and United Bank.
Diversification Opportunities for Egypt Aluminum and United Bank
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Egypt and United is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Egypt Aluminum and The United Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United 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 United Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bank has no effect on the direction of Egypt Aluminum i.e., Egypt Aluminum and United Bank go up and down completely randomly.
Pair Corralation between Egypt Aluminum and United Bank
Assuming the 90 days trading horizon Egypt Aluminum is expected to generate 92.78 times more return on investment than United Bank. However, Egypt Aluminum is 92.78 times more volatile than The United Bank. It trades about 0.42 of its potential returns per unit of risk. The United Bank is currently generating about 0.29 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. The United Bank
Performance |
| Timeline |
| Egypt Aluminum |
| United Bank |
Egypt Aluminum and United Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egypt Aluminum and United Bank
The main advantage of trading using opposite Egypt Aluminum and United Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egypt Aluminum position performs unexpectedly, United Bank 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 United Bank will offset losses from the drop in United Bank'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 |
| United Bank vs. Commercial International Bank Egypt | United Bank vs. Reacap Financial Investments | United Bank vs. Cairo Oils Soap | United Bank vs. QALA For Financial |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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