Correlation Between Orascom Construction and Al Tawfeek
Can any of the company-specific risk be diversified away by investing in both Orascom Construction and Al Tawfeek 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 Al Tawfeek 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 Al Tawfeek Leasing, you can compare the effects of market volatilities on Orascom Construction and Al Tawfeek 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 Al Tawfeek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orascom Construction and Al Tawfeek.
Diversification Opportunities for Orascom Construction and Al Tawfeek
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Orascom and ATLC is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Orascom Construction PLC and Al Tawfeek Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Tawfeek Leasing 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 Al Tawfeek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Tawfeek Leasing has no effect on the direction of Orascom Construction i.e., Orascom Construction and Al Tawfeek go up and down completely randomly.
Pair Corralation between Orascom Construction and Al Tawfeek
Assuming the 90 days trading horizon Orascom Construction PLC is expected to under-perform the Al Tawfeek. But the stock apears to be less risky and, when comparing its historical volatility, Orascom Construction PLC is 1.87 times less risky than Al Tawfeek. The stock trades about -0.19 of its potential returns per unit of risk. The Al Tawfeek Leasing is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 390.00 in Al Tawfeek Leasing on August 27, 2024 and sell it today you would earn a total of 45.00 from holding Al Tawfeek Leasing or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orascom Construction PLC vs. Al Tawfeek Leasing
Performance |
| Timeline |
| Orascom Construction PLC |
| Al Tawfeek Leasing |
Orascom Construction and Al Tawfeek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orascom Construction and Al Tawfeek
The main advantage of trading using opposite Orascom Construction and Al Tawfeek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orascom Construction position performs unexpectedly, Al Tawfeek 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 Al Tawfeek will offset losses from the drop in Al Tawfeek's long position.| Orascom Construction vs. Pyramisa Hotels | Orascom Construction vs. Egyptian Gulf Bank | Orascom Construction vs. Arabia Investments Holding | Orascom Construction vs. QALA For Financial |
| Al Tawfeek vs. Paint Chemicals Industries | Al Tawfeek vs. Egyptians For Investment | Al Tawfeek vs. Misr Oils Soap | Al Tawfeek 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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