Correlation Between Export Development and Telecom Egypt

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Can any of the company-specific risk be diversified away by investing in both Export Development and Telecom Egypt 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 Export Development and Telecom Egypt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Export Development Bank and Telecom Egypt, you can compare the effects of market volatilities on Export Development and Telecom Egypt 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 Export Development with a short position of Telecom Egypt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Export Development and Telecom Egypt.

Diversification Opportunities for Export Development and Telecom Egypt

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Export and Telecom is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Export Development Bank and Telecom Egypt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Egypt and Export Development 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 Export Development Bank are associated (or correlated) with Telecom Egypt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Egypt has no effect on the direction of Export Development i.e., Export Development and Telecom Egypt go up and down completely randomly.

Pair Corralation between Export Development and Telecom Egypt

Assuming the 90 days trading horizon Export Development Bank is expected to under-perform the Telecom Egypt. In addition to that, Export Development is 1.08 times more volatile than Telecom Egypt. It trades about -0.24 of its total potential returns per unit of risk. Telecom Egypt is currently generating about 0.13 per unit of volatility. If you would invest  3,420  in Telecom Egypt on October 12, 2024 and sell it today you would earn a total of  101.00  from holding Telecom Egypt or generate 2.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Export Development Bank  vs.  Telecom Egypt

 Performance 
       Timeline  
Export Development Bank 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Export Development Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Export Development reported solid returns over the last few months and may actually be approaching a breakup point.
Telecom Egypt 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Egypt are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Telecom Egypt may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Export Development and Telecom Egypt Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Export Development and Telecom Egypt

The main advantage of trading using opposite Export Development and Telecom Egypt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Export Development position performs unexpectedly, Telecom Egypt 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 Telecom Egypt will offset losses from the drop in Telecom Egypt's long position.
The idea behind Export Development Bank and Telecom Egypt pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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