Correlation Between Al Khair and Ismailia Development
Can any of the company-specific risk be diversified away by investing in both Al Khair and Ismailia 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 Al Khair and Ismailia Development 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 Ismailia Development and, you can compare the effects of market volatilities on Al Khair and Ismailia 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 Al Khair with a short position of Ismailia Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Khair and Ismailia Development.
Diversification Opportunities for Al Khair and Ismailia Development
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between KRDI and Ismailia is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Al Khair River and Ismailia Development and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ismailia Development and 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 Ismailia Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ismailia Development and has no effect on the direction of Al Khair i.e., Al Khair and Ismailia Development go up and down completely randomly.
Pair Corralation between Al Khair and Ismailia Development
Assuming the 90 days trading horizon Al Khair River is expected to generate 1.36 times more return on investment than Ismailia Development. However, Al Khair is 1.36 times more volatile than Ismailia Development and. It trades about -0.06 of its potential returns per unit of risk. Ismailia Development and is currently generating about -0.2 per unit of risk. If you would invest 119.00 in Al Khair River on September 14, 2024 and sell it today you would lose (62.00) from holding Al Khair River or give up 52.1% 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. Ismailia Development and
Performance |
| Timeline |
| Al Khair River |
| Ismailia Development and |
Al Khair and Ismailia Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Al Khair and Ismailia Development
The main advantage of trading using opposite Al Khair and Ismailia Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Khair position performs unexpectedly, Ismailia 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 Ismailia Development will offset losses from the drop in Ismailia Development'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 |
| Ismailia Development vs. Sharkia National Food | Ismailia Development vs. Misr Hotels | Ismailia Development vs. AJWA for Food | Ismailia Development vs. Orascom Investment 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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