Correlation Between United Bank and Egypt Aluminum
Can any of the company-specific risk be diversified away by investing in both United Bank and Egypt Aluminum 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 United Bank and Egypt Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The United Bank and Egypt Aluminum, you can compare the effects of market volatilities on United Bank and Egypt Aluminum 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 United Bank with a short position of Egypt Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bank and Egypt Aluminum.
Diversification Opportunities for United Bank and Egypt Aluminum
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Egypt is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding The United Bank and Egypt Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egypt Aluminum and United Bank 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 The United Bank are associated (or correlated) with Egypt Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egypt Aluminum has no effect on the direction of United Bank i.e., United Bank and Egypt Aluminum go up and down completely randomly.
Pair Corralation between United Bank and Egypt Aluminum
Assuming the 90 days trading horizon United Bank is expected to generate 135.71 times less return on investment than Egypt Aluminum. But when comparing it to its historical volatility, The United Bank is 92.78 times less risky than Egypt Aluminum. It trades about 0.29 of its potential returns per unit of risk. Egypt Aluminum is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 11,700 in Egypt Aluminum on November 4, 2024 and sell it today you would earn a total of 3,590 from holding Egypt Aluminum or generate 30.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The United Bank vs. Egypt Aluminum
Performance |
| Timeline |
| United Bank |
| Egypt Aluminum |
United Bank and Egypt Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bank and Egypt Aluminum
The main advantage of trading using opposite United Bank and Egypt Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bank position performs unexpectedly, Egypt Aluminum 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 Egypt Aluminum will offset losses from the drop in Egypt Aluminum's long position.| United Bank vs. Commercial International Bank Egypt | United Bank vs. Reacap Financial Investments | United Bank vs. Cairo Oils Soap | United Bank vs. QALA For Financial |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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