Correlation Between Suez Canal and Egypt Aluminum

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

Diversification Opportunities for Suez Canal and Egypt Aluminum

0.1

Correlation Coefficient

Suez Canal  Egypt Aluminum

Average diversification

The 3 months correlation between Suez and Egypt is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Suez Canal Bank and Egypt Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egypt Aluminum 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 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 Suez Canal i.e., Suez Canal and Egypt Aluminum go up and down completely randomly.

Pair Corralation between Suez Canal and Egypt Aluminum

If you would invest  1,521  in Suez Canal Bank on October 9, 2024 and sell it today you would earn a total of  789.00  from holding Suez Canal Bank or generate 51.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.04%
Values	Daily Returns

Suez Canal Bank  vs.  Egypt Aluminum

Suez Canal Bank

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Suez Canal Bank are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Suez Canal reported solid returns over the last few months and may actually be approaching a breakup point.

Egypt Aluminum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Egypt Aluminum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Egypt Aluminum 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 Egypt Aluminum

The main advantage of trading using opposite Suez Canal and Egypt Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suez Canal 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 Suez Canal Bank 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.