Correlation Between Cairo Educational and Faisal Islamic

Can any of the company-specific risk be diversified away by investing in both Cairo Educational and Faisal Islamic 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 Cairo Educational and Faisal Islamic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cairo Educational Services and Faisal Islamic Bank, you can compare the effects of market volatilities on Cairo Educational and Faisal Islamic 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 Cairo Educational with a short position of Faisal Islamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Educational and Faisal Islamic.

Diversification Opportunities for Cairo Educational and Faisal Islamic

0.07

Correlation Coefficient

Cairo Educational  Faisal Islamic

Significant diversification

The 3 months correlation between Cairo and Faisal is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Educational Services and Faisal Islamic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faisal Islamic Bank and Cairo Educational 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 Cairo Educational Services are associated (or correlated) with Faisal Islamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faisal Islamic Bank has no effect on the direction of Cairo Educational i.e., Cairo Educational and Faisal Islamic go up and down completely randomly.

Pair Corralation between Cairo Educational and Faisal Islamic

Assuming the 90 days trading horizon Cairo Educational Services is expected to generate 2.05 times more return on investment than Faisal Islamic. However, Cairo Educational is 2.05 times more volatile than Faisal Islamic Bank. It trades about 0.06 of its potential returns per unit of risk. Faisal Islamic Bank is currently generating about -0.12 per unit of risk. If you would invest  2,903  in Cairo Educational Services on December 24, 2024 and sell it today you would earn a total of  208.00  from holding Cairo Educational Services or generate 7.17% return on investment over 90 days.

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

Cairo Educational Services  vs.  Faisal Islamic Bank

Cairo Educational

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cairo Educational Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Cairo Educational may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Faisal Islamic Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Faisal Islamic Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 Cairo Educational and Faisal Islamic

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

The idea behind Cairo Educational Services and Faisal Islamic Bank 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.