Correlation Between Egyptian Gulf and Al Tawfeek

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

By analyzing existing cross correlation between Egyptian Gulf Bank and Al Tawfeek Leasing, you can compare the effects of market volatilities on Egyptian Gulf and Al Tawfeek 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 Gulf with a short position of Al Tawfeek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Gulf and Al Tawfeek.

Diversification Opportunities for Egyptian Gulf and Al Tawfeek

0.17

Correlation Coefficient

Egyptian Gulf  Al Tawfeek

Average diversification

The 3 months correlation between Egyptian and ATLC is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Gulf Bank and Al Tawfeek Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Tawfeek Leasing and Egyptian Gulf 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 Gulf Bank are associated (or correlated) with Al Tawfeek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Tawfeek Leasing has no effect on the direction of Egyptian Gulf i.e., Egyptian Gulf and Al Tawfeek go up and down completely randomly.

Pair Corralation between Egyptian Gulf and Al Tawfeek

If you would invest  27.00  in Egyptian Gulf Bank on October 23, 2024 and sell it today you would earn a total of  0.00  from holding Egyptian Gulf Bank or generate 0.0% return on investment over 90 days.

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

Egyptian Gulf Bank  vs.  Al Tawfeek Leasing

Egyptian Gulf Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Egyptian Gulf Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Egyptian Gulf is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Al Tawfeek Leasing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Al Tawfeek Leasing 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Egyptian Gulf and Al Tawfeek

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

The idea behind Egyptian Gulf Bank and Al Tawfeek Leasing 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.