Correlation Between Egyptian Transport and B Investments
Can any of the company-specific risk be diversified away by investing in both Egyptian Transport and B Investments 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 Egyptian Transport and B Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Egyptian Transport and B Investments Holding, you can compare the effects of market volatilities on Egyptian Transport and B Investments 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 Egyptian Transport with a short position of B Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Transport and B Investments.
Diversification Opportunities for Egyptian Transport and B Investments
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Egyptian and BINV is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Transport and B Investments Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Investments Holding and Egyptian Transport 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 Egyptian Transport are associated (or correlated) with B Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Investments Holding has no effect on the direction of Egyptian Transport i.e., Egyptian Transport and B Investments go up and down completely randomly.
Pair Corralation between Egyptian Transport and B Investments
Assuming the 90 days trading horizon Egyptian Transport is expected to generate 1.13 times more return on investment than B Investments. However, Egyptian Transport is 1.13 times more volatile than B Investments Holding. It trades about 0.17 of its potential returns per unit of risk. B Investments Holding is currently generating about 0.07 per unit of risk. If you would invest 426.00 in Egyptian Transport on September 3, 2024 and sell it today you would earn a total of 55.00 from holding Egyptian Transport or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egyptian Transport vs. B Investments Holding
Performance |
| Timeline |
| Egyptian Transport |
| B Investments Holding |
Egyptian Transport and B Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egyptian Transport and B Investments
The main advantage of trading using opposite Egyptian Transport and B Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egyptian Transport position performs unexpectedly, B Investments 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 B Investments will offset losses from the drop in B Investments' long position.| Egyptian Transport vs. Paint Chemicals Industries | Egyptian Transport vs. Egyptians For Investment | Egyptian Transport vs. Misr Oils Soap | Egyptian Transport vs. Global Telecom Holding |
| B Investments vs. Paint Chemicals Industries | B Investments vs. Egyptians For Investment | B Investments vs. Misr Oils Soap | B Investments 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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