Correlation Between Zahraa Maadi and Cairo Oils
Can any of the company-specific risk be diversified away by investing in both Zahraa Maadi 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 Zahraa Maadi and Cairo Oils into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zahraa Maadi Investment and Cairo Oils Soap, you can compare the effects of market volatilities on Zahraa Maadi 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 Zahraa Maadi with a short position of Cairo Oils. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zahraa Maadi and Cairo Oils.
Diversification Opportunities for Zahraa Maadi and Cairo Oils
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Zahraa and Cairo is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Zahraa Maadi Investment 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 Zahraa Maadi 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 Zahraa Maadi Investment 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 Zahraa Maadi i.e., Zahraa Maadi and Cairo Oils go up and down completely randomly.
Pair Corralation between Zahraa Maadi and Cairo Oils
Assuming the 90 days trading horizon Zahraa Maadi is expected to generate 2.06 times less return on investment than Cairo Oils. But when comparing it to its historical volatility, Zahraa Maadi Investment is 1.48 times less risky than Cairo Oils. It trades about 0.04 of its potential returns per unit of risk. Cairo Oils Soap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Cairo Oils Soap on August 30, 2024 and sell it today you would earn a total of 10.00 from holding Cairo Oils Soap or generate 62.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zahraa Maadi Investment vs. Cairo Oils Soap
Performance |
| Timeline |
| Zahraa Maadi Investment |
| Cairo Oils Soap |
Zahraa Maadi and Cairo Oils Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zahraa Maadi and Cairo Oils
The main advantage of trading using opposite Zahraa Maadi and Cairo Oils positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zahraa Maadi 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.| Zahraa Maadi vs. Paint Chemicals Industries | Zahraa Maadi vs. Misr Oils Soap | Zahraa Maadi vs. Global Telecom Holding | Zahraa Maadi vs. Qatar Natl Bank |
| Cairo Oils vs. Paint Chemicals Industries | 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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