Correlation Between Egyptian Gulf and Orascom Investment
Can any of the company-specific risk be diversified away by investing in both Egyptian Gulf 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 Egyptian Gulf and Orascom Investment 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 Orascom Investment Holding, you can compare the effects of market volatilities on Egyptian Gulf 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 Egyptian Gulf with a short position of Orascom Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Gulf and Orascom Investment.
Diversification Opportunities for Egyptian Gulf and Orascom Investment
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Egyptian and Orascom is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Gulf Bank and Orascom Investment Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orascom Investment 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 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 Egyptian Gulf i.e., Egyptian Gulf and Orascom Investment go up and down completely randomly.
Pair Corralation between Egyptian Gulf and Orascom Investment
Assuming the 90 days trading horizon Egyptian Gulf Bank is expected to generate 0.63 times more return on investment than Orascom Investment. However, Egyptian Gulf Bank is 1.59 times less risky than Orascom Investment. It trades about 0.15 of its potential returns per unit of risk. Orascom Investment Holding is currently generating about -0.03 per unit of risk. If you would invest 27.00 in Egyptian Gulf Bank on November 4, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egyptian Gulf Bank vs. Orascom Investment Holding
Performance |
| Timeline |
| Egyptian Gulf Bank |
| Orascom Investment |
Egyptian Gulf and Orascom Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egyptian Gulf and Orascom Investment
The main advantage of trading using opposite Egyptian Gulf and Orascom Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egyptian Gulf 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.| Egyptian Gulf vs. Orascom Financial Holding | Egyptian Gulf vs. Housing Development Bank | Egyptian Gulf vs. National Bank | Egyptian Gulf vs. Orascom Investment Holding |
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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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