Correlation Between El Nasr and Nozha International
Can any of the company-specific risk be diversified away by investing in both El Nasr and Nozha International 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 Nozha International 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 Nozha International Hospital, you can compare the effects of market volatilities on El Nasr and Nozha International 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 Nozha International. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Nasr and Nozha International.
Diversification Opportunities for El Nasr and Nozha International
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KABO and Nozha is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding El Nasr Clothes and Nozha International Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nozha International 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 Nozha International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nozha International has no effect on the direction of El Nasr i.e., El Nasr and Nozha International go up and down completely randomly.
Pair Corralation between El Nasr and Nozha International
Assuming the 90 days trading horizon El Nasr Clothes is expected to generate 1.4 times more return on investment than Nozha International. However, El Nasr is 1.4 times more volatile than Nozha International Hospital. It trades about 0.37 of its potential returns per unit of risk. Nozha International Hospital is currently generating about 0.21 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Nasr Clothes vs. Nozha International Hospital
Performance |
| Timeline |
| El Nasr Clothes |
| Nozha International |
El Nasr and Nozha International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Nasr and Nozha International
The main advantage of trading using opposite El Nasr and Nozha International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Nasr position performs unexpectedly, Nozha International 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 Nozha International will offset losses from the drop in Nozha International'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 |
| Nozha International vs. Paint Chemicals Industries | Nozha International vs. Reacap Financial Investments | Nozha International vs. Egyptians For Investment | Nozha International 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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