Correlation Between Egyptian Gulf and Contact Financial
Can any of the company-specific risk be diversified away by investing in both Egyptian Gulf and Contact Financial 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 Egyptian Gulf and Contact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Egyptian Gulf Bank and Contact Financial Holding, you can compare the effects of market volatilities on Egyptian Gulf and Contact Financial 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 Egyptian Gulf with a short position of Contact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Gulf and Contact Financial.
Diversification Opportunities for Egyptian Gulf and Contact Financial
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Egyptian and Contact is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Gulf Bank and Contact Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contact Financial Holding and Egyptian Gulf 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 Egyptian Gulf Bank are associated (or correlated) with Contact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contact Financial Holding has no effect on the direction of Egyptian Gulf i.e., Egyptian Gulf and Contact Financial go up and down completely randomly.
Pair Corralation between Egyptian Gulf and Contact Financial
Assuming the 90 days trading horizon Egyptian Gulf Bank is expected to generate 0.83 times more return on investment than Contact Financial. However, Egyptian Gulf Bank is 1.2 times less risky than Contact Financial. It trades about 0.15 of its potential returns per unit of risk. Contact Financial Holding is currently generating about -0.22 per unit of risk. If you would invest 27.00 in Egyptian Gulf Bank on November 5, 2024 and sell it today you would earn a total of 1.00 from holding Egyptian Gulf Bank or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egyptian Gulf Bank vs. Contact Financial Holding
Performance |
| Timeline |
| Egyptian Gulf Bank |
| Contact Financial Holding |
Egyptian Gulf and Contact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egyptian Gulf and Contact Financial
The main advantage of trading using opposite Egyptian Gulf and Contact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egyptian Gulf position performs unexpectedly, Contact Financial 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 Contact Financial will offset losses from the drop in Contact Financial's long position.| Egyptian Gulf vs. Paint Chemicals Industries | Egyptian Gulf vs. Reacap Financial Investments | Egyptian Gulf vs. Egyptians For Investment | Egyptian Gulf vs. Misr Oils Soap |
| Contact Financial vs. Atlas For Investment | Contact Financial vs. Nile City Investment | Contact Financial vs. Grand Investment Capital | Contact Financial vs. Arab Aluminum |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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