Correlation Between Orascom Construction and International Agricultural
Can any of the company-specific risk be diversified away by investing in both Orascom Construction and International Agricultural 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 International Agricultural 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 International Agricultural Products, you can compare the effects of market volatilities on Orascom Construction and International Agricultural 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 International Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orascom Construction and International Agricultural.
Diversification Opportunities for Orascom Construction and International Agricultural
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Orascom and International is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Orascom Construction PLC and International Agricultural Pro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Agricultural 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 International Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Agricultural has no effect on the direction of Orascom Construction i.e., Orascom Construction and International Agricultural go up and down completely randomly.
Pair Corralation between Orascom Construction and International Agricultural
Assuming the 90 days trading horizon Orascom Construction PLC is expected to generate 0.66 times more return on investment than International Agricultural. However, Orascom Construction PLC is 1.51 times less risky than International Agricultural. It trades about 0.07 of its potential returns per unit of risk. International Agricultural Products is currently generating about 0.05 per unit of risk. If you would invest 17,901 in Orascom Construction PLC on September 19, 2024 and sell it today you would earn a total of 10,499 from holding Orascom Construction PLC or generate 58.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orascom Construction PLC vs. International Agricultural Pro
Performance |
| Timeline |
| Orascom Construction PLC |
| International Agricultural |
Orascom Construction and International Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orascom Construction and International Agricultural
The main advantage of trading using opposite Orascom Construction and International Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orascom Construction position performs unexpectedly, International Agricultural 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 International Agricultural will offset losses from the drop in International Agricultural's long position.| Orascom Construction vs. Paint Chemicals Industries | Orascom Construction vs. Reacap Financial Investments | Orascom Construction vs. Egyptians For Investment | Orascom Construction 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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