Correlation Between Orascom Construction and Arabia Investments
Can any of the company-specific risk be diversified away by investing in both Orascom Construction and Arabia Investments 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 Construction and Arabia Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orascom Construction PLC and Arabia Investments Holding, you can compare the effects of market volatilities on Orascom Construction and Arabia Investments 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 Construction with a short position of Arabia Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orascom Construction and Arabia Investments.
Diversification Opportunities for Orascom Construction and Arabia Investments
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Orascom and Arabia is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Orascom Construction PLC and Arabia Investments Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arabia Investments and Orascom Construction 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 Construction PLC are associated (or correlated) with Arabia Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arabia Investments has no effect on the direction of Orascom Construction i.e., Orascom Construction and Arabia Investments go up and down completely randomly.
Pair Corralation between Orascom Construction and Arabia Investments
Assuming the 90 days trading horizon Orascom Construction PLC is expected to generate 0.49 times more return on investment than Arabia Investments. However, Orascom Construction PLC is 2.05 times less risky than Arabia Investments. It trades about 0.11 of its potential returns per unit of risk. Arabia Investments Holding is currently generating about -0.05 per unit of risk. If you would invest 26,488 in Orascom Construction PLC on November 29, 2024 and sell it today you would earn a total of 462.00 from holding Orascom Construction PLC or generate 1.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orascom Construction PLC vs. Arabia Investments Holding
Performance |
| Timeline |
| Orascom Construction PLC |
| Arabia Investments |
Orascom Construction and Arabia Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orascom Construction and Arabia Investments
The main advantage of trading using opposite Orascom Construction and Arabia Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orascom Construction position performs unexpectedly, Arabia Investments 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 Arabia Investments will offset losses from the drop in Arabia Investments' long position.The idea behind Orascom Construction PLC and Arabia Investments Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Arabia Investments vs. Cairo Educational Services | Arabia Investments vs. Nile City Investment | Arabia Investments vs. Lotus For Agricultural | Arabia Investments 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |