Correlation Between Egyptian Chemical and El Ahli

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

By analyzing existing cross correlation between Egyptian Chemical Industries and El Ahli Investment, you can compare the effects of market volatilities on Egyptian Chemical and El Ahli 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 Chemical with a short position of El Ahli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Chemical and El Ahli.

Diversification Opportunities for Egyptian Chemical and El Ahli

-0.63

Correlation Coefficient

Egyptian Chemical  El Ahli

Excellent diversification

The 3 months correlation between Egyptian and AFDI is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Chemical Industries and El Ahli Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Ahli Investment and Egyptian Chemical 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 Chemical Industries are associated (or correlated) with El Ahli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Ahli Investment has no effect on the direction of Egyptian Chemical i.e., Egyptian Chemical and El Ahli go up and down completely randomly.

Pair Corralation between Egyptian Chemical and El Ahli

Assuming the 90 days trading horizon Egyptian Chemical Industries is expected to generate 1.13 times more return on investment than El Ahli. However, Egyptian Chemical is 1.13 times more volatile than El Ahli Investment. It trades about 0.11 of its potential returns per unit of risk. El Ahli Investment is currently generating about -0.07 per unit of risk. If you would invest  730.00  in Egyptian Chemical Industries on December 23, 2024 and sell it today you would earn a total of  83.00  from holding Egyptian Chemical Industries or generate 11.37% return on investment over 90 days.

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

Egyptian Chemical Industries  vs.  El Ahli Investment

Egyptian Chemical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Egyptian Chemical Industries are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Egyptian Chemical reported solid returns over the last few months and may actually be approaching a breakup point.

El Ahli Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days El Ahli Investment 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 Egyptian Chemical and El Ahli

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

The idea behind Egyptian Chemical Industries and El Ahli Investment 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.