Correlation Between Commercial International and Egyptian Media

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

Diversification Opportunities for Commercial International and Egyptian Media

0.34

Correlation Coefficient

Commercial International  Egyptian Media

Weak diversification

The 3 months correlation between Commercial and Egyptian is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Commercial International Bank and Egyptian Media Production in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Media Production 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 Egyptian Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Media Production has no effect on the direction of Commercial International i.e., Commercial International and Egyptian Media go up and down completely randomly.

Pair Corralation between Commercial International and Egyptian Media

Assuming the 90 days trading horizon Commercial International Bank Egypt is expected to under-perform the Egyptian Media. But the stock apears to be less risky and, when comparing its historical volatility, Commercial International Bank Egypt is 1.97 times less risky than Egyptian Media. The stock trades about -0.11 of its potential returns per unit of risk. The Egyptian Media Production is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,440  in Egyptian Media Production on December 4, 2024 and sell it today you would lose (162.00) from holding Egyptian Media Production or give up 6.64% of portfolio value over 90 days.

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

Commercial International Bank   vs.  Egyptian Media Production

Commercial International

Risk-Adjusted Performance

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.

Egyptian Media Production

Risk-Adjusted Performance

Very Weak

Over the last 90 days Egyptian Media Production 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.

Pair Trading with Commercial International and Egyptian Media

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

The idea behind Commercial International Bank Egypt and Egyptian Media Production 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.