Correlation Between Egyptian Iron and Export Development
Can any of the company-specific risk be diversified away by investing in both Egyptian Iron and Export Development 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 Egyptian Iron and Export Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Egyptian Iron Steel and Export Development Bank, you can compare the effects of market volatilities on Egyptian Iron and Export Development 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 Egyptian Iron with a short position of Export Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Iron and Export Development.
Diversification Opportunities for Egyptian Iron and Export Development
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Egyptian and Export is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Iron Steel and Export Development Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Export Development Bank and Egyptian Iron 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 Egyptian Iron Steel are associated (or correlated) with Export Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Export Development Bank has no effect on the direction of Egyptian Iron i.e., Egyptian Iron and Export Development go up and down completely randomly.
Pair Corralation between Egyptian Iron and Export Development
Assuming the 90 days trading horizon Egyptian Iron Steel is expected to under-perform the Export Development. In addition to that, Egyptian Iron is 1.43 times more volatile than Export Development Bank. It trades about -0.16 of its total potential returns per unit of risk. Export Development Bank is currently generating about -0.09 per unit of volatility. If you would invest 1,857 in Export Development Bank on September 24, 2024 and sell it today you would lose (57.00) from holding Export Development Bank or give up 3.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egyptian Iron Steel vs. Export Development Bank
Performance |
| Timeline |
| Egyptian Iron Steel |
| Export Development Bank |
Egyptian Iron and Export Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egyptian Iron and Export Development
The main advantage of trading using opposite Egyptian Iron and Export Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egyptian Iron position performs unexpectedly, Export Development 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 Export Development will offset losses from the drop in Export Development's long position.| Egyptian Iron vs. Memphis Pharmaceuticals | Egyptian Iron vs. Paint Chemicals Industries | Egyptian Iron vs. Egyptians For Investment | Egyptian Iron vs. Global Telecom Holding |
| Export Development vs. Memphis Pharmaceuticals | Export Development vs. Paint Chemicals Industries | Export Development vs. Egyptians For Investment | Export Development vs. Global Telecom 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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