Correlation Between Al Khair and Egyptian Gulf
Can any of the company-specific risk be diversified away by investing in both Al Khair and Egyptian Gulf 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 Gulf 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 Gulf Bank, you can compare the effects of market volatilities on Al Khair and Egyptian Gulf 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 Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Khair and Egyptian Gulf.
Diversification Opportunities for Al Khair and Egyptian Gulf
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KRDI and Egyptian is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Al Khair River and Egyptian Gulf Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Gulf Bank 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 Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Gulf Bank has no effect on the direction of Al Khair i.e., Al Khair and Egyptian Gulf go up and down completely randomly.
Pair Corralation between Al Khair and Egyptian Gulf
Assuming the 90 days trading horizon Al Khair River is expected to under-perform the Egyptian Gulf. In addition to that, Al Khair is 1.06 times more volatile than Egyptian Gulf Bank. It trades about -0.01 of its total potential returns per unit of risk. Egyptian Gulf Bank is currently generating about 0.0 per unit of volatility. If you would invest 29.00 in Egyptian Gulf Bank on October 26, 2024 and sell it today you would lose (1.00) from holding Egyptian Gulf Bank or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Al Khair River vs. Egyptian Gulf Bank
Performance |
| Timeline |
| Al Khair River |
| Egyptian Gulf Bank |
Al Khair and Egyptian Gulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Al Khair and Egyptian Gulf
The main advantage of trading using opposite Al Khair and Egyptian Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Khair position performs unexpectedly, Egyptian Gulf 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 Gulf will offset losses from the drop in Egyptian Gulf's long position.| Al Khair vs. Paint Chemicals Industries | Al Khair vs. Reacap Financial Investments | Al Khair vs. Egyptians For Investment | Al Khair vs. Misr Oils Soap |
| Egyptian Gulf vs. Contact Financial Holding | Egyptian Gulf vs. Arab Aluminum | Egyptian Gulf vs. QALA For Financial | Egyptian Gulf vs. Act Financial |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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