Correlation Between GM and Elsaeed Contracting
Can any of the company-specific risk be diversified away by investing in both GM and Elsaeed Contracting 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 GM and Elsaeed Contracting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Elsaeed Contracting Real, you can compare the effects of market volatilities on GM and Elsaeed Contracting 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 GM with a short position of Elsaeed Contracting. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Elsaeed Contracting.
Diversification Opportunities for GM and Elsaeed Contracting
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Elsaeed is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Elsaeed Contracting Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elsaeed Contracting Real and GM 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 General Motors are associated (or correlated) with Elsaeed Contracting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elsaeed Contracting Real has no effect on the direction of GM i.e., GM and Elsaeed Contracting go up and down completely randomly.
Pair Corralation between GM and Elsaeed Contracting
Allowing for the 90-day total investment horizon GM is expected to generate 1.11 times less return on investment than Elsaeed Contracting. But when comparing it to its historical volatility, General Motors is 1.35 times less risky than Elsaeed Contracting. It trades about 0.09 of its potential returns per unit of risk. Elsaeed Contracting Real is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Elsaeed Contracting Real on September 3, 2024 and sell it today you would earn a total of 34.00 from holding Elsaeed Contracting Real or generate 53.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 78.06% |
| Values | Daily Returns |
General Motors vs. Elsaeed Contracting Real
Performance |
| Timeline |
| General Motors |
| Elsaeed Contracting Real |
GM and Elsaeed Contracting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Elsaeed Contracting
The main advantage of trading using opposite GM and Elsaeed Contracting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Elsaeed Contracting 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 Elsaeed Contracting will offset losses from the drop in Elsaeed Contracting's long position.The idea behind General Motors and Elsaeed Contracting Real 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.| Elsaeed Contracting vs. Al Baraka Bank | Elsaeed Contracting vs. Export Development Bank | Elsaeed Contracting vs. Misr Oils Soap | Elsaeed Contracting vs. Delta Insurance |
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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