Correlation Between Ezz Steel and Egypt Aluminum
Can any of the company-specific risk be diversified away by investing in both Ezz Steel 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 Ezz Steel and Egypt Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ezz Steel and Egypt Aluminum, you can compare the effects of market volatilities on Ezz Steel 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 Ezz Steel with a short position of Egypt Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ezz Steel and Egypt Aluminum.
Diversification Opportunities for Ezz Steel and Egypt Aluminum
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ezz and Egypt is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ezz Steel and Egypt Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egypt Aluminum and Ezz Steel 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 Ezz Steel 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 Ezz Steel i.e., Ezz Steel and Egypt Aluminum go up and down completely randomly.
Pair Corralation between Ezz Steel and Egypt Aluminum
Assuming the 90 days trading horizon Ezz Steel is expected to under-perform the Egypt Aluminum. In addition to that, Ezz Steel is 1.17 times more volatile than Egypt Aluminum. It trades about -0.16 of its total potential returns per unit of risk. Egypt Aluminum is currently generating about 0.13 per unit of volatility. If you would invest 11,200 in Egypt Aluminum on September 12, 2024 and sell it today you would earn a total of 509.00 from holding Egypt Aluminum or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ezz Steel vs. Egypt Aluminum
Performance |
| Timeline |
| Ezz Steel |
| Egypt Aluminum |
Ezz Steel and Egypt Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ezz Steel and Egypt Aluminum
The main advantage of trading using opposite Ezz Steel and Egypt Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ezz Steel 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.| Ezz Steel vs. Paint Chemicals Industries | Ezz Steel vs. Reacap Financial Investments | Ezz Steel vs. Egyptians For Investment | Ezz Steel vs. Misr Oils Soap |
| Egypt Aluminum vs. Paint Chemicals Industries | Egypt Aluminum vs. Reacap Financial Investments | Egypt Aluminum vs. Egyptians For Investment | Egypt Aluminum 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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