Correlation Between El Nasr and Egyptian Chemical
Can any of the company-specific risk be diversified away by investing in both El Nasr and Egyptian Chemical 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 El Nasr and Egyptian Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Nasr Clothes and Egyptian Chemical Industries, you can compare the effects of market volatilities on El Nasr and Egyptian Chemical 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 El Nasr with a short position of Egyptian Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Nasr and Egyptian Chemical.
Diversification Opportunities for El Nasr and Egyptian Chemical
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KABO and Egyptian is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding El Nasr Clothes and Egyptian Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Chemical and El Nasr 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 El Nasr Clothes are associated (or correlated) with Egyptian Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Chemical has no effect on the direction of El Nasr i.e., El Nasr and Egyptian Chemical go up and down completely randomly.
Pair Corralation between El Nasr and Egyptian Chemical
Assuming the 90 days trading horizon El Nasr Clothes is expected to generate 3.71 times more return on investment than Egyptian Chemical. However, El Nasr is 3.71 times more volatile than Egyptian Chemical Industries. It trades about 0.37 of its potential returns per unit of risk. Egyptian Chemical Industries is currently generating about -0.26 per unit of risk. If you would invest 282.00 in El Nasr Clothes on September 19, 2024 and sell it today you would earn a total of 97.00 from holding El Nasr Clothes or generate 34.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Nasr Clothes vs. Egyptian Chemical Industries
Performance |
| Timeline |
| El Nasr Clothes |
| Egyptian Chemical |
El Nasr and Egyptian Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Nasr and Egyptian Chemical
The main advantage of trading using opposite El Nasr and Egyptian Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Nasr position performs unexpectedly, Egyptian Chemical 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 Chemical will offset losses from the drop in Egyptian Chemical's long position.| El Nasr vs. Paint Chemicals Industries | El Nasr vs. Reacap Financial Investments | El Nasr vs. Egyptians For Investment | El Nasr vs. Misr Oils Soap |
| Egyptian Chemical vs. Paint Chemicals Industries | Egyptian Chemical vs. Reacap Financial Investments | Egyptian Chemical vs. Egyptians For Investment | Egyptian Chemical 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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