Correlation Between Commercial International and Faisal Islamic

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

Diversification Opportunities for Commercial International and Faisal Islamic

-0.25

Correlation Coefficient

Commercial International  Faisal Islamic

Very good diversification

The 3 months correlation between Commercial and Faisal is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Commercial International Bank 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 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 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 Commercial International i.e., Commercial International and Faisal Islamic go up and down completely randomly.

Pair Corralation between Commercial International and Faisal Islamic

Assuming the 90 days trading horizon Commercial International Bank Egypt is expected to under-perform the Faisal Islamic. But the stock apears to be less risky and, when comparing its historical volatility, Commercial International Bank Egypt is 2.19 times less risky than Faisal Islamic. The stock trades about -0.05 of its potential returns per unit of risk. The Faisal Islamic Bank is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,249  in Faisal Islamic Bank on October 20, 2024 and sell it today you would earn a total of  551.00  from holding Faisal Islamic Bank or generate 16.96% return on investment over 90 days.

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

Commercial International Bank   vs.  Faisal Islamic Bank

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.

Faisal Islamic Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Faisal Islamic Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Faisal Islamic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commercial International and Faisal Islamic

The main advantage of trading using opposite Commercial International and Faisal Islamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial International 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 Commercial International Bank Egypt 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..