Correlation Between Egyptians For and Juhayna Food

Can any of the company-specific risk be diversified away by investing in both Egyptians For and Juhayna Food 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 Egyptians For and Juhayna Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Egyptians For and Juhayna Food

0.71

Correlation Coefficient

Egyptians For  Juhayna Food

Poor diversification

The 3 months correlation between Egyptians and Juhayna is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Egyptians For Investment and Juhayna Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juhayna Food Industries and Egyptians For 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 Egyptians For Investment are associated (or correlated) with Juhayna Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juhayna Food Industries has no effect on the direction of Egyptians For i.e., Egyptians For and Juhayna Food go up and down completely randomly.

Pair Corralation between Egyptians For and Juhayna Food

Assuming the 90 days trading horizon Egyptians For Investment is expected to generate 1.5 times more return on investment than Juhayna Food. However, Egyptians For is 1.5 times more volatile than Juhayna Food Industries. It trades about 0.12 of its potential returns per unit of risk. Juhayna Food Industries is currently generating about 0.08 per unit of risk. If you would invest  24.00  in Egyptians For Investment on December 5, 2024 and sell it today you would earn a total of  5.00  from holding Egyptians For Investment or generate 20.83% return on investment over 90 days.

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

Egyptians For Investment  vs.  Juhayna Food Industries

Egyptians For Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Egyptians For Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Egyptians For reported solid returns over the last few months and may actually be approaching a breakup point.

Juhayna Food Industries

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Juhayna Food Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Juhayna Food reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Egyptians For and Juhayna Food

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

The idea behind Egyptians For Investment and Juhayna Food Industries 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.