Correlation Between Faisal Islamic and Egyptian Gulf
Can any of the company-specific risk be diversified away by investing in both Faisal Islamic and Egyptian Gulf 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 Faisal Islamic and Egyptian Gulf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faisal Islamic Bank and Egyptian Gulf Bank, you can compare the effects of market volatilities on Faisal Islamic and Egyptian Gulf 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 Faisal Islamic with a short position of Egyptian Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faisal Islamic and Egyptian Gulf.
Diversification Opportunities for Faisal Islamic and Egyptian Gulf
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Faisal and Egyptian is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Faisal Islamic Bank and Egyptian Gulf Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Gulf Bank and Faisal Islamic 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 Faisal Islamic Bank are associated (or correlated) with Egyptian Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Gulf Bank has no effect on the direction of Faisal Islamic i.e., Faisal Islamic and Egyptian Gulf go up and down completely randomly.
Pair Corralation between Faisal Islamic and Egyptian Gulf
Assuming the 90 days trading horizon Faisal Islamic Bank is expected to under-perform the Egyptian Gulf. But the stock apears to be less risky and, when comparing its historical volatility, Faisal Islamic Bank is 4.06 times less risky than Egyptian Gulf. The stock trades about -0.22 of its potential returns per unit of risk. The Egyptian Gulf Bank is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Egyptian Gulf Bank on November 3, 2024 and sell it today you would earn a total of 1.00 from holding Egyptian Gulf Bank or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faisal Islamic Bank vs. Egyptian Gulf Bank
Performance |
| Timeline |
| Faisal Islamic Bank |
| Egyptian Gulf Bank |
Faisal Islamic and Egyptian Gulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faisal Islamic and Egyptian Gulf
The main advantage of trading using opposite Faisal Islamic and Egyptian Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faisal Islamic position performs unexpectedly, Egyptian Gulf 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 Gulf will offset losses from the drop in Egyptian Gulf's long position.| Faisal Islamic vs. Misr Hotels | Faisal Islamic vs. Misr Chemical Industries | Faisal Islamic vs. Medical Packaging | Faisal Islamic vs. Dice Sport Casual |
| Egyptian Gulf vs. Orascom Financial Holding | Egyptian Gulf vs. Housing Development Bank | Egyptian Gulf vs. National Bank | Egyptian Gulf vs. Orascom Investment 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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