Correlation Between Ezz Steel and Cairo For

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

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

Diversification Opportunities for Ezz Steel and Cairo For

0.12

Correlation Coefficient

Ezz Steel  Cairo For

Average diversification

The 3 months correlation between Ezz and Cairo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ezz Steel and Cairo For Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo For 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 Cairo For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo For Investment has no effect on the direction of Ezz Steel i.e., Ezz Steel and Cairo For go up and down completely randomly.

Pair Corralation between Ezz Steel and Cairo For

Assuming the 90 days trading horizon Ezz Steel is expected to generate 2.06 times more return on investment than Cairo For. However, Ezz Steel is 2.06 times more volatile than Cairo For Investment. It trades about 0.06 of its potential returns per unit of risk. Cairo For Investment is currently generating about 0.06 per unit of risk. 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	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ezz Steel  vs.  Cairo For 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.

Cairo For Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cairo For Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Cairo For is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ezz Steel and Cairo For

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

The idea behind Ezz Steel and Cairo For 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.