Correlation Between Ford and El Kahera
Can any of the company-specific risk be diversified away by investing in both Ford and El Kahera 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 Ford and El Kahera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and El Kahera El, you can compare the effects of market volatilities on Ford and El Kahera 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 Ford with a short position of El Kahera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and El Kahera.
Diversification Opportunities for Ford and El Kahera
Very good diversification
The 3 months correlation between Ford and KWIN is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and El Kahera El in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Kahera El and Ford 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 Ford Motor are associated (or correlated) with El Kahera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Kahera El has no effect on the direction of Ford i.e., Ford and El Kahera go up and down completely randomly.
Pair Corralation between Ford and El Kahera
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.75 times more return on investment than El Kahera. However, Ford Motor is 1.33 times less risky than El Kahera. It trades about 0.18 of its potential returns per unit of risk. El Kahera El is currently generating about -0.08 per unit of risk. If you would invest 1,027 in Ford Motor on August 30, 2024 and sell it today you would earn a total of 83.00 from holding Ford Motor or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.61% |
| Values | Daily Returns |
Ford Motor vs. El Kahera El
Performance |
| Timeline |
| Ford Motor |
| El Kahera El |
Ford and El Kahera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and El Kahera
The main advantage of trading using opposite Ford and El Kahera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, El Kahera 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 El Kahera will offset losses from the drop in El Kahera's long position.The idea behind Ford Motor and El Kahera El 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.| El Kahera vs. Commercial International Bank Egypt | El Kahera vs. National Bank | El Kahera vs. Misr Financial Investments | El Kahera vs. El Ahli 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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