Correlation Between Egyptian Financial and Dice Sport

Can any of the company-specific risk be diversified away by investing in both Egyptian Financial and Dice Sport 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 Egyptian Financial and Dice Sport into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Egyptian Financial Industrial and Dice Sport Casual, you can compare the effects of market volatilities on Egyptian Financial and Dice Sport 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 Egyptian Financial with a short position of Dice Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Financial and Dice Sport.

Diversification Opportunities for Egyptian Financial and Dice Sport

0.39

Correlation Coefficient

Egyptian Financial  Dice Sport

Weak diversification

The 3 months correlation between Egyptian and Dice is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Financial Industrial and Dice Sport Casual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dice Sport Casual and Egyptian Financial 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 Egyptian Financial Industrial are associated (or correlated) with Dice Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dice Sport Casual has no effect on the direction of Egyptian Financial i.e., Egyptian Financial and Dice Sport go up and down completely randomly.

Pair Corralation between Egyptian Financial and Dice Sport

Assuming the 90 days trading horizon Egyptian Financial is expected to generate 2.94 times less return on investment than Dice Sport. But when comparing it to its historical volatility, Egyptian Financial Industrial is 1.75 times less risky than Dice Sport. It trades about 0.05 of its potential returns per unit of risk. Dice Sport Casual is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  240.00  in Dice Sport Casual on December 5, 2024 and sell it today you would earn a total of  24.00  from holding Dice Sport Casual or generate 10.0% return on investment over 90 days.

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

Egyptian Financial Industrial  vs.  Dice Sport Casual

Egyptian Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Egyptian Financial Industrial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Egyptian Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Dice Sport Casual

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dice Sport Casual are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Dice Sport reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Egyptian Financial and Dice Sport

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

The idea behind Egyptian Financial Industrial and Dice Sport Casual 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.