Correlation Between Ezz Steel and Orascom Construction
Can any of the company-specific risk be diversified away by investing in both Ezz Steel and Orascom Construction 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 Orascom Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ezz Steel and Orascom Construction PLC, you can compare the effects of market volatilities on Ezz Steel and Orascom Construction 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 Orascom Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ezz Steel and Orascom Construction.
Diversification Opportunities for Ezz Steel and Orascom Construction
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ezz and Orascom is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ezz Steel and Orascom Construction PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orascom Construction PLC 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 Orascom Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orascom Construction PLC has no effect on the direction of Ezz Steel i.e., Ezz Steel and Orascom Construction go up and down completely randomly.
Pair Corralation between Ezz Steel and Orascom Construction
Assuming the 90 days trading horizon Ezz Steel is expected to generate 0.77 times more return on investment than Orascom Construction. However, Ezz Steel is 1.3 times less risky than Orascom Construction. It trades about 0.61 of its potential returns per unit of risk. Orascom Construction PLC is currently generating about -0.24 per unit of risk. If you would invest 11,452 in Ezz Steel on November 2, 2024 and sell it today you would earn a total of 1,909 from holding Ezz Steel or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ezz Steel vs. Orascom Construction PLC
Performance |
| Timeline |
| Ezz Steel |
| Orascom Construction PLC |
Ezz Steel and Orascom Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ezz Steel and Orascom Construction
The main advantage of trading using opposite Ezz Steel and Orascom Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ezz Steel position performs unexpectedly, Orascom Construction 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 Construction will offset losses from the drop in Orascom Construction'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 |
| Orascom Construction vs. Paint Chemicals Industries | Orascom Construction vs. Reacap Financial Investments | Orascom Construction vs. Egyptians For Investment | Orascom Construction 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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