Correlation Between International Agricultural and Cairo Oils
Can any of the company-specific risk be diversified away by investing in both International Agricultural and Cairo Oils 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 International Agricultural and Cairo Oils into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Agricultural Products and Cairo Oils Soap, you can compare the effects of market volatilities on International Agricultural and Cairo Oils 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 International Agricultural with a short position of Cairo Oils. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Agricultural and Cairo Oils.
Diversification Opportunities for International Agricultural and Cairo Oils
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between International and Cairo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding International Agricultural Pro and Cairo Oils Soap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Oils Soap and International Agricultural 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 International Agricultural Products are associated (or correlated) with Cairo Oils. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Oils Soap has no effect on the direction of International Agricultural i.e., International Agricultural and Cairo Oils go up and down completely randomly.
Pair Corralation between International Agricultural and Cairo Oils
Assuming the 90 days trading horizon International Agricultural Products is expected to under-perform the Cairo Oils. But the stock apears to be less risky and, when comparing its historical volatility, International Agricultural Products is 1.61 times less risky than Cairo Oils. The stock trades about -0.27 of its potential returns per unit of risk. The Cairo Oils Soap is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Cairo Oils Soap on September 19, 2024 and sell it today you would earn a total of 0.00 from holding Cairo Oils Soap or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Agricultural Pro vs. Cairo Oils Soap
Performance |
| Timeline |
| International Agricultural |
| Cairo Oils Soap |
International Agricultural and Cairo Oils Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Agricultural and Cairo Oils
The main advantage of trading using opposite International Agricultural and Cairo Oils positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Agricultural position performs unexpectedly, Cairo Oils 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 Cairo Oils will offset losses from the drop in Cairo Oils' long position.The idea behind International Agricultural Products and Cairo Oils Soap 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.
| Cairo Oils vs. Paint Chemicals Industries | Cairo Oils vs. Reacap Financial Investments | Cairo Oils vs. Egyptians For Investment | Cairo Oils vs. Misr Oils Soap |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |