Correlation Between Orascom Financial and Egyptian Transport
Can any of the company-specific risk be diversified away by investing in both Orascom Financial and Egyptian Transport 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 Orascom Financial and Egyptian Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orascom Financial Holding and Egyptian Transport, you can compare the effects of market volatilities on Orascom Financial and Egyptian Transport 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 Orascom Financial with a short position of Egyptian Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orascom Financial and Egyptian Transport.
Diversification Opportunities for Orascom Financial and Egyptian Transport
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Orascom and Egyptian is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Orascom Financial Holding and Egyptian Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Transport and Orascom Financial 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 Orascom Financial Holding are associated (or correlated) with Egyptian Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Transport has no effect on the direction of Orascom Financial i.e., Orascom Financial and Egyptian Transport go up and down completely randomly.
Pair Corralation between Orascom Financial and Egyptian Transport
Assuming the 90 days trading horizon Orascom Financial is expected to generate 1.49 times less return on investment than Egyptian Transport. But when comparing it to its historical volatility, Orascom Financial Holding is 1.08 times less risky than Egyptian Transport. It trades about 0.04 of its potential returns per unit of risk. Egyptian Transport is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 320.00 in Egyptian Transport on September 20, 2024 and sell it today you would earn a total of 261.00 from holding Egyptian Transport or generate 81.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orascom Financial Holding vs. Egyptian Transport
Performance |
| Timeline |
| Orascom Financial Holding |
| Egyptian Transport |
Orascom Financial and Egyptian Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orascom Financial and Egyptian Transport
The main advantage of trading using opposite Orascom Financial and Egyptian Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orascom Financial position performs unexpectedly, Egyptian Transport 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 Transport will offset losses from the drop in Egyptian Transport's long position.| Orascom Financial vs. Paint Chemicals Industries | Orascom Financial vs. Reacap Financial Investments | Orascom Financial vs. Egyptians For Investment | Orascom Financial vs. Misr Oils Soap |
| Egyptian Transport vs. Paint Chemicals Industries | Egyptian Transport vs. Reacap Financial Investments | Egyptian Transport vs. Egyptians For Investment | Egyptian Transport 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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