Correlation Between Al Tawfeek and Ismailia National

Can any of the company-specific risk be diversified away by investing in both Al Tawfeek 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 Al Tawfeek and Ismailia National 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 Ismailia National Food, you can compare the effects of market volatilities on Al Tawfeek 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 Al Tawfeek with a short position of Ismailia National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Tawfeek and Ismailia National.

Diversification Opportunities for Al Tawfeek and Ismailia National

-0.46

Correlation Coefficient

Al Tawfeek  Ismailia National

Very good diversification

The 3 months correlation between ATLC and Ismailia is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Al Tawfeek Leasing 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 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 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 Al Tawfeek i.e., Al Tawfeek and Ismailia National go up and down completely randomly.

Pair Corralation between Al Tawfeek and Ismailia National

Assuming the 90 days trading horizon Al Tawfeek Leasing is expected to under-perform the Ismailia National. But the stock apears to be less risky and, when comparing its historical volatility, Al Tawfeek Leasing is 2.61 times less risky than Ismailia National. The stock trades about -0.2 of its potential returns per unit of risk. The Ismailia National Food is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  6,271  in Ismailia National Food on October 22, 2024 and sell it today you would earn a total of  4,380  from holding Ismailia National Food or generate 69.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.97%
Values	Daily Returns

Al Tawfeek Leasing  vs.  Ismailia National Food

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 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.

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 Al Tawfeek and Ismailia National

The main advantage of trading using opposite Al Tawfeek and Ismailia National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Tawfeek 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 Al Tawfeek Leasing 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.