Correlation Between Sharkia National and Cairo Oils
Can any of the company-specific risk be diversified away by investing in both Sharkia National and Cairo Oils 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 Sharkia National and Cairo Oils into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sharkia National Food and Cairo Oils Soap, you can compare the effects of market volatilities on Sharkia National and Cairo Oils 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 Sharkia National with a short position of Cairo Oils. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sharkia National and Cairo Oils.
Diversification Opportunities for Sharkia National and Cairo Oils
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sharkia and Cairo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sharkia National Food and Cairo Oils Soap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Oils Soap and Sharkia National 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 Sharkia National Food are associated (or correlated) with Cairo Oils. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Oils Soap has no effect on the direction of Sharkia National i.e., Sharkia National and Cairo Oils go up and down completely randomly.
Pair Corralation between Sharkia National and Cairo Oils
Assuming the 90 days trading horizon Sharkia National Food is expected to generate 1.07 times more return on investment than Cairo Oils. However, Sharkia National is 1.07 times more volatile than Cairo Oils Soap. It trades about 0.49 of its potential returns per unit of risk. Cairo Oils Soap is currently generating about 0.17 per unit of risk. If you would invest 325.00 in Sharkia National Food on September 2, 2024 and sell it today you would earn a total of 98.00 from holding Sharkia National Food or generate 30.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sharkia National Food vs. Cairo Oils Soap
Performance |
| Timeline |
| Sharkia National Food |
| Cairo Oils Soap |
Sharkia National and Cairo Oils Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sharkia National and Cairo Oils
The main advantage of trading using opposite Sharkia National and Cairo Oils positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sharkia National position performs unexpectedly, Cairo Oils 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 Cairo Oils will offset losses from the drop in Cairo Oils' long position.| Sharkia National vs. Egyptians For Investment | Sharkia National vs. Misr Oils Soap | Sharkia National vs. Global Telecom Holding | Sharkia National vs. Qatar Natl Bank |
| Cairo Oils vs. Egyptians For Investment | Cairo Oils vs. Misr Oils Soap | Cairo Oils vs. Global Telecom Holding | Cairo Oils vs. Qatar Natl Bank |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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