Correlation Between Commercial International and Natural Gas

Can any of the company-specific risk be diversified away by investing in both Commercial International and Natural Gas 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 Natural Gas 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 Natural Gas Mining, you can compare the effects of market volatilities on Commercial International and Natural Gas 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 Natural Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial International and Natural Gas.

Diversification Opportunities for Commercial International and Natural Gas

-0.49

Correlation Coefficient

Commercial International  Natural Gas

Very good diversification

The 3 months correlation between Commercial and Natural is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Commercial International Bank and Natural Gas Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Gas Mining 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 Natural Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Gas Mining has no effect on the direction of Commercial International i.e., Commercial International and Natural Gas go up and down completely randomly.

Pair Corralation between Commercial International and Natural Gas

Assuming the 90 days trading horizon Commercial International is expected to generate 12.73 times less return on investment than Natural Gas. But when comparing it to its historical volatility, Commercial International Bank Egypt is 3.48 times less risky than Natural Gas. It trades about 0.03 of its potential returns per unit of risk. Natural Gas Mining is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,616  in Natural Gas Mining on September 29, 2024 and sell it today you would earn a total of  1,554  from holding Natural Gas Mining or generate 59.4% return on investment over 90 days.

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

Commercial International Bank   vs.  Natural Gas Mining

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.

Natural Gas Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Gas Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Commercial International and Natural Gas

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

The idea behind Commercial International Bank Egypt and Natural Gas Mining 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..