Correlation Between Telecom Egypt and Egyptian Transport
Can any of the company-specific risk be diversified away by investing in both Telecom Egypt and Egyptian Transport 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 Telecom Egypt and Egyptian Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Egypt and Egyptian Transport, you can compare the effects of market volatilities on Telecom Egypt and Egyptian Transport 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 Telecom Egypt with a short position of Egyptian Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Egypt and Egyptian Transport.
Diversification Opportunities for Telecom Egypt and Egyptian Transport
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Telecom and Egyptian is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Egypt and Egyptian Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Transport and Telecom Egypt 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 Telecom Egypt are associated (or correlated) with Egyptian Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Transport has no effect on the direction of Telecom Egypt i.e., Telecom Egypt and Egyptian Transport go up and down completely randomly.
Pair Corralation between Telecom Egypt and Egyptian Transport
Assuming the 90 days trading horizon Telecom Egypt is expected to under-perform the Egyptian Transport. But the stock apears to be less risky and, when comparing its historical volatility, Telecom Egypt is 1.5 times less risky than Egyptian Transport. The stock trades about 0.0 of its potential returns per unit of risk. The Egyptian Transport is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 307.00 in Egyptian Transport on September 3, 2024 and sell it today you would earn a total of 174.00 from holding Egyptian Transport or generate 56.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Egypt vs. Egyptian Transport
Performance |
| Timeline |
| Telecom Egypt |
| Egyptian Transport |
Telecom Egypt and Egyptian Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Egypt and Egyptian Transport
The main advantage of trading using opposite Telecom Egypt and Egyptian Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Egypt position performs unexpectedly, Egyptian Transport 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 Egyptian Transport will offset losses from the drop in Egyptian Transport's long position.| Telecom Egypt vs. Paint Chemicals Industries | Telecom Egypt vs. Egyptians For Investment | Telecom Egypt vs. Misr Oils Soap | Telecom Egypt vs. Global Telecom Holding |
| Egyptian Transport vs. Paint Chemicals Industries | Egyptian Transport vs. Egyptians For Investment | Egyptian Transport vs. Misr Oils Soap | Egyptian Transport vs. Global Telecom Holding |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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