Correlation Between Egyptian Gulf and Al Khair
Can any of the company-specific risk be diversified away by investing in both Egyptian Gulf and Al Khair 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 Al Khair 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 Al Khair River, you can compare the effects of market volatilities on Egyptian Gulf and Al Khair 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 Al Khair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Gulf and Al Khair.
Diversification Opportunities for Egyptian Gulf and Al Khair
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Egyptian and KRDI is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Gulf Bank and Al Khair River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Khair River 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 Al Khair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Khair River has no effect on the direction of Egyptian Gulf i.e., Egyptian Gulf and Al Khair go up and down completely randomly.
Pair Corralation between Egyptian Gulf and Al Khair
Assuming the 90 days trading horizon Egyptian Gulf Bank is expected to generate 0.95 times more return on investment than Al Khair. However, Egyptian Gulf Bank is 1.06 times less risky than Al Khair. It trades about 0.0 of its potential returns per unit of risk. Al Khair River is currently generating about -0.01 per unit of risk. If you would invest 29.00 in Egyptian Gulf Bank on October 26, 2024 and sell it today you would lose (1.00) from holding Egyptian Gulf Bank or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egyptian Gulf Bank vs. Al Khair River
Performance |
| Timeline |
| Egyptian Gulf Bank |
| Al Khair River |
Egyptian Gulf and Al Khair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egyptian Gulf and Al Khair
The main advantage of trading using opposite Egyptian Gulf and Al Khair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egyptian Gulf position performs unexpectedly, Al Khair 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 Al Khair will offset losses from the drop in Al Khair's long position.| Egyptian Gulf vs. Contact Financial Holding | Egyptian Gulf vs. Arab Aluminum | Egyptian Gulf vs. QALA For Financial | Egyptian Gulf vs. Act Financial |
| Al Khair vs. Paint Chemicals Industries | Al Khair vs. Reacap Financial Investments | Al Khair vs. Egyptians For Investment | Al Khair 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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