Correlation Between El Ahli and Commercial International

Can any of the company-specific risk be diversified away by investing in both El Ahli and Commercial International 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 Commercial International 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 Commercial International Bank Egypt, you can compare the effects of market volatilities on El Ahli and Commercial International 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 Commercial International. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Ahli and Commercial International.

Diversification Opportunities for El Ahli and Commercial International

0.73

Correlation Coefficient

El Ahli  Commercial International

Poor diversification

The 3 months correlation between AFDI and Commercial is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding El Ahli Investment and Commercial International Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial International 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 Commercial International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial International has no effect on the direction of El Ahli i.e., El Ahli and Commercial International go up and down completely randomly.

Pair Corralation between El Ahli and Commercial International

Assuming the 90 days trading horizon El Ahli Investment is expected to under-perform the Commercial International. In addition to that, El Ahli is 1.69 times more volatile than Commercial International Bank Egypt. It trades about -0.12 of its total potential returns per unit of risk. Commercial International Bank Egypt is currently generating about -0.11 per unit of volatility. If you would invest  8,230  in Commercial International Bank Egypt on December 4, 2024 and sell it today you would lose (605.00) from holding Commercial International Bank Egypt or give up 7.35% of portfolio value over 90 days.

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

El Ahli Investment  vs.  Commercial International Bank

El Ahli Investment

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Commercial International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commercial International Bank Egypt has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with El Ahli and Commercial International

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

The idea behind El Ahli Investment and Commercial International Bank Egypt 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..