Correlation Between Egypt Aluminum and Grand Investment

Can any of the company-specific risk be diversified away by investing in both Egypt Aluminum and Grand Investment 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 Egypt Aluminum and Grand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Egypt Aluminum and Grand Investment Capital, you can compare the effects of market volatilities on Egypt Aluminum and Grand Investment 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 Egypt Aluminum with a short position of Grand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egypt Aluminum and Grand Investment.

Diversification Opportunities for Egypt Aluminum and Grand Investment

0.25

Correlation Coefficient

Egypt Aluminum  Grand Investment

Modest diversification

The 3 months correlation between Egypt and Grand is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Egypt Aluminum and Grand Investment Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Investment Capital and Egypt Aluminum 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 Egypt Aluminum are associated (or correlated) with Grand Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Investment Capital has no effect on the direction of Egypt Aluminum i.e., Egypt Aluminum and Grand Investment go up and down completely randomly.

Pair Corralation between Egypt Aluminum and Grand Investment

Assuming the 90 days trading horizon Egypt Aluminum is expected to generate 1.16 times more return on investment than Grand Investment. However, Egypt Aluminum is 1.16 times more volatile than Grand Investment Capital. It trades about 0.09 of its potential returns per unit of risk. Grand Investment Capital is currently generating about 0.05 per unit of risk. If you would invest  11,300  in Egypt Aluminum on September 16, 2024 and sell it today you would earn a total of  337.00  from holding Egypt Aluminum or generate 2.98% return on investment over 90 days.

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

Egypt Aluminum  vs.  Grand Investment Capital

Egypt Aluminum

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Egypt Aluminum are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Egypt Aluminum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grand Investment Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Investment Capital 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 Egypt Aluminum and Grand Investment

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

The idea behind Egypt Aluminum and Grand Investment Capital 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.