Correlation Between Egyptian Chemical and Nozha International

Can any of the company-specific risk be diversified away by investing in both Egyptian Chemical and Nozha International 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 Nozha International 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 Nozha International Hospital, you can compare the effects of market volatilities on Egyptian Chemical and Nozha International 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 Nozha International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Chemical and Nozha International.

Diversification Opportunities for Egyptian Chemical and Nozha International

-0.76

Correlation Coefficient

Egyptian Chemical  Nozha International

Pay attention - limited upside

The 3 months correlation between Egyptian and Nozha is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Chemical Industries and Nozha International Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nozha International 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 Nozha International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nozha International has no effect on the direction of Egyptian Chemical i.e., Egyptian Chemical and Nozha International go up and down completely randomly.

Pair Corralation between Egyptian Chemical and Nozha International

Assuming the 90 days trading horizon Egyptian Chemical Industries is expected to under-perform the Nozha International. But the stock apears to be less risky and, when comparing its historical volatility, Egyptian Chemical Industries is 2.75 times less risky than Nozha International. The stock trades about -0.11 of its potential returns per unit of risk. The Nozha International Hospital is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  640.00  in Nozha International Hospital on September 16, 2024 and sell it today you would earn a total of  295.00  from holding Nozha International Hospital or generate 46.09% 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.  Nozha International Hospital

Egyptian Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Egyptian Chemical Industries 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.

Nozha International

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nozha International Hospital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Nozha International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Egyptian Chemical and Nozha International

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

The idea behind Egyptian Chemical Industries and Nozha International Hospital 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..