Correlation Between Suez Canal and Cairo For

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

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

Diversification Opportunities for Suez Canal and Cairo For

-0.73

Correlation Coefficient

Suez Canal  Cairo For

Pay attention - limited upside

The 3 months correlation between Suez and Cairo is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Suez Canal Bank and Cairo For Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo For Investment and Suez Canal 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 Suez Canal Bank are associated (or correlated) with Cairo For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo For Investment has no effect on the direction of Suez Canal i.e., Suez Canal and Cairo For go up and down completely randomly.

Pair Corralation between Suez Canal and Cairo For

Assuming the 90 days trading horizon Suez Canal Bank is expected to under-perform the Cairo For. In addition to that, Suez Canal is 2.16 times more volatile than Cairo For Investment. It trades about -0.01 of its total potential returns per unit of risk. Cairo For Investment is currently generating about -0.02 per unit of volatility. If you would invest  1,451  in Cairo For Investment on December 22, 2024 and sell it today you would lose (43.00) from holding Cairo For Investment or give up 2.96% of portfolio value over 90 days.

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

Suez Canal Bank  vs.  Cairo For Investment

Suez Canal Bank

Risk-Adjusted Performance

Very Weak

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

Cairo For Investment

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Suez Canal and Cairo For

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

The idea behind Suez Canal Bank and Cairo For Investment 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.