Correlation Between Orascom Financial and Egyptian Iron
Can any of the company-specific risk be diversified away by investing in both Orascom Financial and Egyptian Iron 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 Iron 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 Iron Steel, you can compare the effects of market volatilities on Orascom Financial and Egyptian Iron 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 Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orascom Financial and Egyptian Iron.
Diversification Opportunities for Orascom Financial and Egyptian Iron
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Orascom and Egyptian is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Orascom Financial Holding and Egyptian Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Iron Steel 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 Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Iron Steel has no effect on the direction of Orascom Financial i.e., Orascom Financial and Egyptian Iron go up and down completely randomly.
Pair Corralation between Orascom Financial and Egyptian Iron
Assuming the 90 days trading horizon Orascom Financial Holding is expected to generate 1.01 times more return on investment than Egyptian Iron. However, Orascom Financial is 1.01 times more volatile than Egyptian Iron Steel. It trades about -0.04 of its potential returns per unit of risk. Egyptian Iron Steel is currently generating about -0.16 per unit of risk. If you would invest 38.00 in Orascom Financial Holding on September 24, 2024 and sell it today you would lose (1.00) from holding Orascom Financial Holding or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orascom Financial Holding vs. Egyptian Iron Steel
Performance |
| Timeline |
| Orascom Financial Holding |
| Egyptian Iron Steel |
Orascom Financial and Egyptian Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orascom Financial and Egyptian Iron
The main advantage of trading using opposite Orascom Financial and Egyptian Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orascom Financial position performs unexpectedly, Egyptian Iron 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 Iron will offset losses from the drop in Egyptian Iron's long position.| Orascom Financial vs. Memphis Pharmaceuticals | Orascom Financial vs. Paint Chemicals Industries | Orascom Financial vs. Egyptians For Investment | Orascom Financial vs. Global Telecom Holding |
| Egyptian Iron vs. Memphis Pharmaceuticals | Egyptian Iron vs. Paint Chemicals Industries | Egyptian Iron vs. Egyptians For Investment | Egyptian Iron vs. Global Telecom 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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