Correlation Between Al Khair and Egyptian Financial
Can any of the company-specific risk be diversified away by investing in both Al Khair and Egyptian Financial 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 Al Khair and Egyptian Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Al Khair River and Egyptian Financial Industrial, you can compare the effects of market volatilities on Al Khair and Egyptian Financial 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 Al Khair with a short position of Egyptian Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Khair and Egyptian Financial.
Diversification Opportunities for Al Khair and Egyptian Financial
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KRDI and Egyptian is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Al Khair River and Egyptian Financial Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Financial and Al Khair 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 Al Khair River are associated (or correlated) with Egyptian Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Financial has no effect on the direction of Al Khair i.e., Al Khair and Egyptian Financial go up and down completely randomly.
Pair Corralation between Al Khair and Egyptian Financial
Assuming the 90 days trading horizon Al Khair River is expected to generate 1.69 times more return on investment than Egyptian Financial. However, Al Khair is 1.69 times more volatile than Egyptian Financial Industrial. It trades about 0.25 of its potential returns per unit of risk. Egyptian Financial Industrial is currently generating about 0.07 per unit of risk. If you would invest 57.00 in Al Khair River on November 5, 2024 and sell it today you would earn a total of 7.00 from holding Al Khair River or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Al Khair River vs. Egyptian Financial Industrial
Performance |
| Timeline |
| Al Khair River |
| Egyptian Financial |
Al Khair and Egyptian Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Al Khair and Egyptian Financial
The main advantage of trading using opposite Al Khair and Egyptian Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Khair position performs unexpectedly, Egyptian Financial 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 Financial will offset losses from the drop in Egyptian Financial's long position.| Al Khair vs. The United Bank | Al Khair vs. Delta Insurance | Al Khair vs. Odin for Investment | Al Khair vs. Mohandes Insurance |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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