Correlation Between Commercial International and El Ahli

Can any of the company-specific risk be diversified away by investing in both Commercial International and El Ahli 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 Commercial International and El Ahli into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Commercial International and El Ahli

-0.54

Correlation Coefficient

Commercial International  El Ahli

Excellent diversification

The 3 months correlation between Commercial and AFDI is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Commercial International Bank and El Ahli Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Ahli Investment and Commercial International 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 Commercial International Bank Egypt are associated (or correlated) with El Ahli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Ahli Investment has no effect on the direction of Commercial International i.e., Commercial International and El Ahli go up and down completely randomly.

Pair Corralation between Commercial International and El Ahli

Assuming the 90 days trading horizon Commercial International Bank Egypt is expected to generate 0.56 times more return on investment than El Ahli. However, Commercial International Bank Egypt is 1.79 times less risky than El Ahli. It trades about -0.04 of its potential returns per unit of risk. El Ahli Investment is currently generating about -0.03 per unit of risk. If you would invest  8,546  in Commercial International Bank Egypt on September 15, 2024 and sell it today you would lose (247.00) from holding Commercial International Bank Egypt or give up 2.89% of portfolio value over 90 days.

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

Commercial International Bank   vs.  El Ahli Investment

Commercial International

Risk-Adjusted Performance

0 of 100

Very Weak

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

El Ahli Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Commercial International and El Ahli

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

The idea behind Commercial International Bank Egypt and El Ahli 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.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.