Correlation Between El Ahli and Cairo Educational

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

By analyzing existing cross correlation between El Ahli Investment and Cairo Educational Services, you can compare the effects of market volatilities on El Ahli and Cairo Educational 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 El Ahli with a short position of Cairo Educational. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Ahli and Cairo Educational.

Diversification Opportunities for El Ahli and Cairo Educational

-0.26

Correlation Coefficient

El Ahli  Cairo Educational

Very good diversification

The 3 months correlation between AFDI and Cairo is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding El Ahli Investment and Cairo Educational Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Educational and El Ahli 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 El Ahli Investment are associated (or correlated) with Cairo Educational. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Educational has no effect on the direction of El Ahli i.e., El Ahli and Cairo Educational go up and down completely randomly.

Pair Corralation between El Ahli and Cairo Educational

Assuming the 90 days trading horizon El Ahli Investment is expected to generate 1.29 times more return on investment than Cairo Educational. However, El Ahli is 1.29 times more volatile than Cairo Educational Services. It trades about 0.06 of its potential returns per unit of risk. Cairo Educational Services is currently generating about 0.07 per unit of risk. If you would invest  1,591  in El Ahli Investment on October 26, 2024 and sell it today you would earn a total of  1,361  from holding El Ahli Investment or generate 85.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

El Ahli Investment  vs.  Cairo Educational Services

El Ahli Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days El Ahli Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cairo Educational

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cairo Educational Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Cairo Educational may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with El Ahli and Cairo Educational

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

The idea behind El Ahli Investment and Cairo Educational Services 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.

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.