Correlation Between Telecom Egypt and Orascom Financial
Can any of the company-specific risk be diversified away by investing in both Telecom Egypt 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 Telecom Egypt and Orascom Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Egypt and Orascom Financial Holding, you can compare the effects of market volatilities on Telecom Egypt 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 Telecom Egypt with a short position of Orascom Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Egypt and Orascom Financial.
Diversification Opportunities for Telecom Egypt and Orascom Financial
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Telecom and Orascom is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Egypt 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 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 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 Telecom Egypt i.e., Telecom Egypt and Orascom Financial go up and down completely randomly.
Pair Corralation between Telecom Egypt and Orascom Financial
Assuming the 90 days trading horizon Telecom Egypt is expected to generate 3.56 times less return on investment than Orascom Financial. But when comparing it to its historical volatility, Telecom Egypt is 2.71 times less risky than Orascom Financial. It trades about 0.13 of its potential returns per unit of risk. Orascom Financial Holding is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 39.00 in Orascom Financial Holding on October 12, 2024 and sell it today you would earn a total of 4.00 from holding Orascom Financial Holding or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Egypt vs. Orascom Financial Holding
Performance |
| Timeline |
| Telecom Egypt |
| Orascom Financial Holding |
Telecom Egypt and Orascom Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Egypt and Orascom Financial
The main advantage of trading using opposite Telecom Egypt and Orascom Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Egypt 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.| Telecom Egypt vs. Copper For Commercial | Telecom Egypt vs. Reacap Financial Investments | Telecom Egypt vs. Saudi Egyptian Investment | Telecom Egypt vs. Mohandes Insurance |
| Orascom Financial vs. Iron And Steel | Orascom Financial vs. Reacap Financial Investments | Orascom Financial vs. Golden Textiles Clothes | Orascom Financial vs. Saudi Egyptian Investment |
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 CEOs Directory module to screen CEOs from public companies around the world.
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