Correlation Between Egyptian Chemical and Egypt Aluminum
Can any of the company-specific risk be diversified away by investing in both Egyptian Chemical and Egypt Aluminum 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 Chemical and Egypt Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Egyptian Chemical Industries and Egypt Aluminum, you can compare the effects of market volatilities on Egyptian Chemical and Egypt Aluminum 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 Chemical with a short position of Egypt Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Chemical and Egypt Aluminum.
Diversification Opportunities for Egyptian Chemical and Egypt Aluminum
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Egyptian and Egypt is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Chemical Industries and Egypt Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egypt Aluminum and Egyptian Chemical 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 Chemical Industries are associated (or correlated) with Egypt Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egypt Aluminum has no effect on the direction of Egyptian Chemical i.e., Egyptian Chemical and Egypt Aluminum go up and down completely randomly.
Pair Corralation between Egyptian Chemical and Egypt Aluminum
Assuming the 90 days trading horizon Egyptian Chemical Industries is expected to under-perform the Egypt Aluminum. But the stock apears to be less risky and, when comparing its historical volatility, Egyptian Chemical Industries is 1.63 times less risky than Egypt Aluminum. The stock trades about -0.26 of its potential returns per unit of risk. The Egypt Aluminum is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 11,300 in Egypt Aluminum on September 19, 2024 and sell it today you would earn a total of 360.00 from holding Egypt Aluminum or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egyptian Chemical Industries vs. Egypt Aluminum
Performance |
| Timeline |
| Egyptian Chemical |
| Egypt Aluminum |
Egyptian Chemical and Egypt Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egyptian Chemical and Egypt Aluminum
The main advantage of trading using opposite Egyptian Chemical and Egypt Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egyptian Chemical position performs unexpectedly, Egypt Aluminum 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 Egypt Aluminum will offset losses from the drop in Egypt Aluminum's long position.| Egyptian Chemical vs. Paint Chemicals Industries | Egyptian Chemical vs. Reacap Financial Investments | Egyptian Chemical vs. Egyptians For Investment | Egyptian Chemical vs. Misr Oils Soap |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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