Correlation Between Natural Gas and Orascom Investment
Can any of the company-specific risk be diversified away by investing in both Natural Gas and Orascom 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 Natural Gas and Orascom Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Gas Mining and Orascom Investment Holding, you can compare the effects of market volatilities on Natural Gas and Orascom 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 Natural Gas with a short position of Orascom Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Gas and Orascom Investment.
Diversification Opportunities for Natural Gas and Orascom Investment
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Natural and Orascom is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Natural Gas Mining and Orascom Investment Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orascom Investment and Natural Gas 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 Natural Gas Mining are associated (or correlated) with Orascom Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orascom Investment has no effect on the direction of Natural Gas i.e., Natural Gas and Orascom Investment go up and down completely randomly.
Pair Corralation between Natural Gas and Orascom Investment
Assuming the 90 days trading horizon Natural Gas Mining is expected to under-perform the Orascom Investment. But the stock apears to be less risky and, when comparing its historical volatility, Natural Gas Mining is 1.63 times less risky than Orascom Investment. The stock trades about -0.04 of its potential returns per unit of risk. The Orascom Investment Holding is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 43.00 in Orascom Investment Holding on December 4, 2024 and sell it today you would earn a total of 9.00 from holding Orascom Investment Holding or generate 20.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.0% |
Values | Daily Returns |
Natural Gas Mining vs. Orascom Investment Holding
Performance |
Timeline |
Natural Gas Mining |
Orascom Investment |
Natural Gas and Orascom Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Natural Gas and Orascom Investment
The main advantage of trading using opposite Natural Gas and Orascom Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Gas position performs unexpectedly, Orascom 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 Orascom Investment will offset losses from the drop in Orascom Investment's long position.Natural Gas vs. Egyptian Transport | Natural Gas vs. General Silos Storage | Natural Gas vs. Mohandes Insurance | Natural Gas vs. Credit Agricole Egypt |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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