Correlation Between Admie Holding and Ellaktor

Can any of the company-specific risk be diversified away by investing in both Admie Holding and Ellaktor 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 Admie Holding and Ellaktor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Admie Holding SA and Ellaktor SA, you can compare the effects of market volatilities on Admie Holding and Ellaktor 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 Admie Holding with a short position of Ellaktor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Admie Holding and Ellaktor.

Diversification Opportunities for Admie Holding and Ellaktor

0.92

Correlation Coefficient

Admie Holding  Ellaktor

Almost no diversification

The 3 months correlation between Admie and Ellaktor is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Admie Holding SA and Ellaktor SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellaktor SA and Admie Holding 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 Admie Holding SA are associated (or correlated) with Ellaktor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellaktor SA has no effect on the direction of Admie Holding i.e., Admie Holding and Ellaktor go up and down completely randomly.

Pair Corralation between Admie Holding and Ellaktor

Assuming the 90 days trading horizon Admie Holding is expected to generate 1.83 times less return on investment than Ellaktor. But when comparing it to its historical volatility, Admie Holding SA is 1.55 times less risky than Ellaktor. It trades about 0.15 of its potential returns per unit of risk. Ellaktor SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  180.00  in Ellaktor SA on October 22, 2024 and sell it today you would earn a total of  44.00  from holding Ellaktor SA or generate 24.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Admie Holding SA  vs.  Ellaktor SA

Admie Holding SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Admie Holding SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Admie Holding sustained solid returns over the last few months and may actually be approaching a breakup point.

Ellaktor SA

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ellaktor SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward-looking signals, Ellaktor displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Admie Holding and Ellaktor

The main advantage of trading using opposite Admie Holding and Ellaktor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Admie Holding position performs unexpectedly, Ellaktor 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 Ellaktor will offset losses from the drop in Ellaktor's long position.

The idea behind Admie Holding SA and Ellaktor SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.