Correlation Between Saudi Egyptian and Contact Financial
Can any of the company-specific risk be diversified away by investing in both Saudi Egyptian and Contact Financial 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 Saudi Egyptian and Contact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saudi Egyptian Investment and Contact Financial Holding, you can compare the effects of market volatilities on Saudi Egyptian and Contact Financial 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 Saudi Egyptian with a short position of Contact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saudi Egyptian and Contact Financial.
Diversification Opportunities for Saudi Egyptian and Contact Financial
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Saudi and Contact is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Saudi Egyptian Investment and Contact Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contact Financial Holding and Saudi Egyptian 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 Saudi Egyptian Investment are associated (or correlated) with Contact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contact Financial Holding has no effect on the direction of Saudi Egyptian i.e., Saudi Egyptian and Contact Financial go up and down completely randomly.
Pair Corralation between Saudi Egyptian and Contact Financial
Assuming the 90 days trading horizon Saudi Egyptian Investment is expected to generate 1.88 times more return on investment than Contact Financial. However, Saudi Egyptian is 1.88 times more volatile than Contact Financial Holding. It trades about 0.08 of its potential returns per unit of risk. Contact Financial Holding is currently generating about -0.15 per unit of risk. If you would invest 6,357 in Saudi Egyptian Investment on November 1, 2024 and sell it today you would earn a total of 821.00 from holding Saudi Egyptian Investment or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.0% |
| Values | Daily Returns |
Saudi Egyptian Investment vs. Contact Financial Holding
Performance |
| Timeline |
| Saudi Egyptian Investment |
| Contact Financial Holding |
Saudi Egyptian and Contact Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saudi Egyptian and Contact Financial
The main advantage of trading using opposite Saudi Egyptian and Contact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saudi Egyptian position performs unexpectedly, Contact Financial 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 Contact Financial will offset losses from the drop in Contact Financial's long position.| Saudi Egyptian vs. Nile City Investment | Saudi Egyptian vs. Grand Investment Capital | Saudi Egyptian vs. Egyptian Media Production | Saudi Egyptian vs. Al Arafa Investment |
| Contact Financial vs. Egyptians For Investment | Contact Financial vs. Saudi Egyptian Investment | Contact Financial vs. Odin for Investment | Contact Financial vs. Sharkia National Food |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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