Correlation Between Egyptians For and Orascom Financial
Can any of the company-specific risk be diversified away by investing in both Egyptians For and Orascom 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 Egyptians For and Orascom Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Egyptians For Investment and Orascom Financial Holding, you can compare the effects of market volatilities on Egyptians For and Orascom 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 Egyptians For with a short position of Orascom Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptians For and Orascom Financial.
Diversification Opportunities for Egyptians For and Orascom Financial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Egyptians and Orascom is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Egyptians For Investment and Orascom Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orascom Financial Holding and Egyptians For 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 Egyptians For Investment are associated (or correlated) with Orascom Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orascom Financial Holding has no effect on the direction of Egyptians For i.e., Egyptians For and Orascom Financial go up and down completely randomly.
Pair Corralation between Egyptians For and Orascom Financial
Assuming the 90 days trading horizon Egyptians For Investment is expected to generate 14.37 times more return on investment than Orascom Financial. However, Egyptians For is 14.37 times more volatile than Orascom Financial Holding. It trades about 0.04 of its potential returns per unit of risk. Orascom Financial Holding is currently generating about 0.04 per unit of risk. If you would invest 1,154 in Egyptians For Investment on August 31, 2024 and sell it today you would lose (1,129) from holding Egyptians For Investment or give up 97.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egyptians For Investment vs. Orascom Financial Holding
Performance |
| Timeline |
| Egyptians For Investment |
| Orascom Financial Holding |
Egyptians For and Orascom Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egyptians For and Orascom Financial
The main advantage of trading using opposite Egyptians For and Orascom Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egyptians For position performs unexpectedly, Orascom 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 Orascom Financial will offset losses from the drop in Orascom Financial's long position.| Egyptians For vs. Paint Chemicals Industries | Egyptians For vs. Reacap Financial Investments | Egyptians For vs. Misr Oils Soap | Egyptians For vs. Global Telecom Holding |
| Orascom Financial vs. Orascom Construction PLC | Orascom Financial vs. Nile City Investment | Orascom Financial vs. The Arab Dairy | Orascom Financial vs. Sharkia National Food |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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