Correlation Between Ezz Steel and Al Arafa

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

By analyzing existing cross correlation between Ezz Steel and Al Arafa Investment, you can compare the effects of market volatilities on Ezz Steel and Al Arafa 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 Al Arafa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ezz Steel and Al Arafa.

Diversification Opportunities for Ezz Steel and Al Arafa

0.0

Correlation Coefficient

Ezz Steel  Al Arafa

Pay attention - limited upside

The 3 months correlation between Ezz and AIVCB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ezz Steel and Al Arafa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Arafa Investment 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 Al Arafa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Arafa Investment has no effect on the direction of Ezz Steel i.e., Ezz Steel and Al Arafa go up and down completely randomly.

Pair Corralation between Ezz Steel and Al Arafa

If you would invest  9,900  in Ezz Steel on September 15, 2024 and sell it today you would earn a total of  702.00  from holding Ezz Steel or generate 7.09% return on investment over 90 days.

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

Ezz Steel  vs.  Al Arafa Investment

Ezz Steel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ezz Steel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Ezz Steel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Al Arafa Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Al Arafa Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Al Arafa is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ezz Steel and Al Arafa

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

The idea behind Ezz Steel and Al Arafa 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.