Correlation Between Arab Moltaka and Ismailia National

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

By analyzing existing cross correlation between Arab Moltaka Investments and Ismailia National Food, you can compare the effects of market volatilities on Arab Moltaka and Ismailia National 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 Arab Moltaka with a short position of Ismailia National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arab Moltaka and Ismailia National.

Diversification Opportunities for Arab Moltaka and Ismailia National

-0.25

Correlation Coefficient

Arab Moltaka  Ismailia National

Very good diversification

The 3 months correlation between Arab and Ismailia is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Arab Moltaka Investments and Ismailia National Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ismailia National Food and Arab Moltaka 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 Arab Moltaka Investments are associated (or correlated) with Ismailia National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ismailia National Food has no effect on the direction of Arab Moltaka i.e., Arab Moltaka and Ismailia National go up and down completely randomly.

Pair Corralation between Arab Moltaka and Ismailia National

Assuming the 90 days trading horizon Arab Moltaka is expected to generate 55.94 times less return on investment than Ismailia National. But when comparing it to its historical volatility, Arab Moltaka Investments is 2.34 times less risky than Ismailia National. It trades about 0.01 of its potential returns per unit of risk. Ismailia National Food is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  6,166  in Ismailia National Food on October 22, 2024 and sell it today you would earn a total of  4,485  from holding Ismailia National Food or generate 72.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.04%
Values	Daily Returns

Arab Moltaka Investments  vs.  Ismailia National Food

Arab Moltaka Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arab Moltaka Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Arab Moltaka is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ismailia National Food

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ismailia National Food are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Ismailia National reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arab Moltaka and Ismailia National

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

The idea behind Arab Moltaka Investments and Ismailia National Food 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.