Correlation Between Ezz Steel and Act Financial
Can any of the company-specific risk be diversified away by investing in both Ezz Steel and Act Financial 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 Ezz Steel and Act Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ezz Steel and Act Financial, you can compare the effects of market volatilities on Ezz Steel and Act Financial 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 Ezz Steel with a short position of Act Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ezz Steel and Act Financial.
Diversification Opportunities for Ezz Steel and Act Financial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ezz and Act is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ezz Steel and Act Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Act Financial and Ezz Steel 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 Ezz Steel are associated (or correlated) with Act Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Act Financial has no effect on the direction of Ezz Steel i.e., Ezz Steel and Act Financial go up and down completely randomly.
Pair Corralation between Ezz Steel and Act Financial
Assuming the 90 days trading horizon Ezz Steel is expected to generate 1.11 times more return on investment than Act Financial. However, Ezz Steel is 1.11 times more volatile than Act Financial. It trades about 0.13 of its potential returns per unit of risk. Act Financial is currently generating about -0.03 per unit of risk. If you would invest 2,465 in Ezz Steel on October 11, 2024 and sell it today you would earn a total of 9,235 from holding Ezz Steel or generate 374.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 23.76% |
Values | Daily Returns |
Ezz Steel vs. Act Financial
Performance |
Timeline |
Ezz Steel |
Act Financial |
Ezz Steel and Act Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ezz Steel and Act Financial
The main advantage of trading using opposite Ezz Steel and Act Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ezz Steel position performs unexpectedly, Act Financial 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 Act Financial will offset losses from the drop in Act Financial's long position.Ezz Steel vs. Paint Chemicals Industries | Ezz Steel vs. Reacap Financial Investments | Ezz Steel vs. Egyptians For Investment | Ezz Steel vs. Misr Oils Soap |
Act Financial vs. Ezz Steel | Act Financial vs. Gadwa For Industrial | Act Financial vs. B Investments Holding | Act Financial vs. Alexandria New Medical |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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