Correlation Between Arab Moltaka and El Nasr
Can any of the company-specific risk be diversified away by investing in both Arab Moltaka and El Nasr 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 El Nasr 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 El Nasr Clothes, you can compare the effects of market volatilities on Arab Moltaka and El Nasr 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 El Nasr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arab Moltaka and El Nasr.
Diversification Opportunities for Arab Moltaka and El Nasr
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arab and KABO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Arab Moltaka Investments and El Nasr Clothes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Nasr Clothes 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 El Nasr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Nasr Clothes has no effect on the direction of Arab Moltaka i.e., Arab Moltaka and El Nasr go up and down completely randomly.
Pair Corralation between Arab Moltaka and El Nasr
Assuming the 90 days trading horizon Arab Moltaka is expected to generate 2.15 times less return on investment than El Nasr. But when comparing it to its historical volatility, Arab Moltaka Investments is 1.05 times less risky than El Nasr. It trades about 0.12 of its potential returns per unit of risk. El Nasr Clothes is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 263.00 in El Nasr Clothes on September 15, 2024 and sell it today you would earn a total of 128.00 from holding El Nasr Clothes or generate 48.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Arab Moltaka Investments vs. El Nasr Clothes
Performance |
Timeline |
Arab Moltaka Investments |
El Nasr Clothes |
Arab Moltaka and El Nasr Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Arab Moltaka and El Nasr
The main advantage of trading using opposite Arab Moltaka and El Nasr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arab Moltaka position performs unexpectedly, El Nasr 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 El Nasr will offset losses from the drop in El Nasr's long position.Arab Moltaka vs. Paint Chemicals Industries | Arab Moltaka vs. Reacap Financial Investments | Arab Moltaka vs. Egyptians For Investment | Arab Moltaka vs. Misr Oils Soap |
El Nasr vs. Paint Chemicals Industries | El Nasr vs. Reacap Financial Investments | El Nasr vs. Egyptians For Investment | El Nasr vs. Misr Oils Soap |
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 Stocks Directory module to find actively traded stocks across global markets.
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