Correlation Between Al Tawfeek and Egypt Aluminum

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

By analyzing existing cross correlation between Al Tawfeek Leasing and Egypt Aluminum, you can compare the effects of market volatilities on Al Tawfeek and Egypt Aluminum 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 Al Tawfeek with a short position of Egypt Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Tawfeek and Egypt Aluminum.

Diversification Opportunities for Al Tawfeek and Egypt Aluminum

-0.21

Correlation Coefficient

Al Tawfeek  Egypt Aluminum

Very good diversification

The 3 months correlation between ATLC and Egypt is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Al Tawfeek Leasing and Egypt Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egypt Aluminum and Al Tawfeek 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 Al Tawfeek Leasing are associated (or correlated) with Egypt Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egypt Aluminum has no effect on the direction of Al Tawfeek i.e., Al Tawfeek and Egypt Aluminum go up and down completely randomly.

Pair Corralation between Al Tawfeek and Egypt Aluminum

Assuming the 90 days trading horizon Al Tawfeek is expected to generate 16.32 times less return on investment than Egypt Aluminum. In addition to that, Al Tawfeek is 1.67 times more volatile than Egypt Aluminum. It trades about 0.0 of its total potential returns per unit of risk. Egypt Aluminum is currently generating about 0.09 per unit of volatility. If you would invest  11,300  in Egypt Aluminum on October 11, 2024 and sell it today you would earn a total of  907.00  from holding Egypt Aluminum or generate 8.03% return on investment over 90 days.

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

Al Tawfeek Leasing  vs.  Egypt Aluminum

Al Tawfeek Leasing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Egypt Aluminum

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Egypt Aluminum are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Egypt Aluminum may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Al Tawfeek and Egypt Aluminum

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

The idea behind Al Tawfeek Leasing and Egypt Aluminum 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.