Correlation Between Egyptian Chemical and El Nasr
Can any of the company-specific risk be diversified away by investing in both Egyptian Chemical and El Nasr 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 El Nasr 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 El Nasr Clothes, you can compare the effects of market volatilities on Egyptian Chemical and El Nasr 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 El Nasr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Chemical and El Nasr.
Diversification Opportunities for Egyptian Chemical and El Nasr
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Egyptian and KABO is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Chemical Industries and El Nasr Clothes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Nasr Clothes 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 El Nasr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Nasr Clothes has no effect on the direction of Egyptian Chemical i.e., Egyptian Chemical and El Nasr go up and down completely randomly.
Pair Corralation between Egyptian Chemical and El Nasr
Assuming the 90 days trading horizon Egyptian Chemical Industries is expected to under-perform the El Nasr. But the stock apears to be less risky and, when comparing its historical volatility, Egyptian Chemical Industries is 3.71 times less risky than El Nasr. The stock trades about -0.26 of its potential returns per unit of risk. The El Nasr Clothes is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 282.00 in El Nasr Clothes on September 19, 2024 and sell it today you would earn a total of 97.00 from holding El Nasr Clothes or generate 34.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egyptian Chemical Industries vs. El Nasr Clothes
Performance |
| Timeline |
| Egyptian Chemical |
| El Nasr Clothes |
Egyptian Chemical and El Nasr Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egyptian Chemical and El Nasr
The main advantage of trading using opposite Egyptian Chemical and El Nasr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egyptian Chemical position performs unexpectedly, El Nasr 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 El Nasr will offset losses from the drop in El Nasr'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 |
| El Nasr vs. Paint Chemicals Industries | El Nasr vs. Reacap Financial Investments | El Nasr vs. Egyptians For Investment | El Nasr 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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