Correlation Between Saudi Egyptian and El Nasr
Can any of the company-specific risk be diversified away by investing in both Saudi Egyptian and El Nasr 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 El Nasr 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 El Nasr Clothes, you can compare the effects of market volatilities on Saudi Egyptian and El Nasr 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 El Nasr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saudi Egyptian and El Nasr.
Diversification Opportunities for Saudi Egyptian and El Nasr
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Saudi and KABO is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Saudi Egyptian Investment and El Nasr Clothes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Nasr Clothes 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 El Nasr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Nasr Clothes has no effect on the direction of Saudi Egyptian i.e., Saudi Egyptian and El Nasr go up and down completely randomly.
Pair Corralation between Saudi Egyptian and El Nasr
Assuming the 90 days trading horizon Saudi Egyptian Investment is expected to generate 2.71 times more return on investment than El Nasr. However, Saudi Egyptian is 2.71 times more volatile than El Nasr Clothes. It trades about 0.19 of its potential returns per unit of risk. El Nasr Clothes is currently generating about 0.38 per unit of risk. If you would invest 6,200 in Saudi Egyptian Investment on November 6, 2024 and sell it today you would earn a total of 978.00 from holding Saudi Egyptian Investment or generate 15.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saudi Egyptian Investment vs. El Nasr Clothes
Performance |
| Timeline |
| Saudi Egyptian Investment |
| El Nasr Clothes |
Saudi Egyptian and El Nasr Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saudi Egyptian and El Nasr
The main advantage of trading using opposite Saudi Egyptian and El Nasr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saudi Egyptian position performs unexpectedly, El Nasr 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 El Nasr will offset losses from the drop in El Nasr's long position.| Saudi Egyptian vs. Arabia Investments Holding | Saudi Egyptian vs. Cairo For Investment | Saudi Egyptian vs. ODIN Investments | Saudi Egyptian vs. Egyptian Iron Steel |
| El Nasr vs. Paint Chemicals Industries | El Nasr vs. Reacap Financial Investments | El Nasr vs. Egyptians For Investment | El Nasr 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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