Correlation Between Commercial International and El Nasr

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

Diversification Opportunities for Commercial International and El Nasr

-0.41

Correlation Coefficient

Commercial International  El Nasr

Very good diversification

The 3 months correlation between Commercial and KABO is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Commercial International Bank and El Nasr Clothes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Nasr Clothes 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 Nasr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Nasr Clothes has no effect on the direction of Commercial International i.e., Commercial International and El Nasr go up and down completely randomly.

Pair Corralation between Commercial International and El Nasr

Assuming the 90 days trading horizon Commercial International Bank Egypt is expected to under-perform the El Nasr. But the stock apears to be less risky and, when comparing its historical volatility, Commercial International Bank Egypt is 1.7 times less risky than El Nasr. The stock trades about -0.2 of its potential returns per unit of risk. The El Nasr Clothes is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  385.00  in El Nasr Clothes on October 27, 2024 and sell it today you would earn a total of  55.00  from holding El Nasr Clothes or generate 14.29% 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.  El Nasr Clothes

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 latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

El Nasr Clothes

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in El Nasr Clothes are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, El Nasr reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commercial International and El Nasr

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

The idea behind Commercial International Bank Egypt and El Nasr Clothes 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.