Correlation Between Faisal Islamic and Pyramisa Hotels
Can any of the company-specific risk be diversified away by investing in both Faisal Islamic and Pyramisa Hotels 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 Pyramisa Hotels 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 Pyramisa Hotels, you can compare the effects of market volatilities on Faisal Islamic and Pyramisa Hotels 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 Pyramisa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faisal Islamic and Pyramisa Hotels.
Diversification Opportunities for Faisal Islamic and Pyramisa Hotels
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Faisal and Pyramisa is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Faisal Islamic Bank and Pyramisa Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyramisa Hotels 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 Pyramisa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyramisa Hotels has no effect on the direction of Faisal Islamic i.e., Faisal Islamic and Pyramisa Hotels go up and down completely randomly.
Pair Corralation between Faisal Islamic and Pyramisa Hotels
Assuming the 90 days trading horizon Faisal Islamic Bank is expected to generate 1.02 times more return on investment than Pyramisa Hotels. However, Faisal Islamic is 1.02 times more volatile than Pyramisa Hotels. It trades about 0.23 of its potential returns per unit of risk. Pyramisa Hotels is currently generating about -0.28 per unit of risk. If you would invest 3,271 in Faisal Islamic Bank on August 31, 2024 and sell it today you would earn a total of 636.00 from holding Faisal Islamic Bank or generate 19.44% 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. Pyramisa Hotels
Performance |
| Timeline |
| Faisal Islamic Bank |
| Pyramisa Hotels |
Faisal Islamic and Pyramisa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faisal Islamic and Pyramisa Hotels
The main advantage of trading using opposite Faisal Islamic and Pyramisa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faisal Islamic position performs unexpectedly, Pyramisa Hotels 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 Pyramisa Hotels will offset losses from the drop in Pyramisa Hotels' long position.| Faisal Islamic vs. Egyptians For Investment | Faisal Islamic vs. Misr Hotels | Faisal Islamic vs. International Agricultural Products | Faisal Islamic vs. El Ahli Investment |
| Pyramisa Hotels vs. Act Financial | Pyramisa Hotels vs. Egypt Aluminum | Pyramisa Hotels vs. Faisal Islamic Bank | Pyramisa Hotels vs. National Bank |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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