Correlation Between Ezz Steel and Copper For

Can any of the company-specific risk be diversified away by investing in both Ezz Steel and Copper 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 Copper 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 Copper For Commercial, you can compare the effects of market volatilities on Ezz Steel and Copper 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 Copper For. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ezz Steel and Copper For.

Diversification Opportunities for Ezz Steel and Copper For

0.77

Correlation Coefficient

Ezz Steel  Copper For

Poor diversification

The 3 months correlation between Ezz and Copper is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ezz Steel and Copper For Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper For Commercial 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 Copper For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper For Commercial has no effect on the direction of Ezz Steel i.e., Ezz Steel and Copper For go up and down completely randomly.

Pair Corralation between Ezz Steel and Copper For

Assuming the 90 days trading horizon Ezz Steel is expected to generate 0.37 times more return on investment than Copper For. However, Ezz Steel is 2.68 times less risky than Copper For. It trades about 0.31 of its potential returns per unit of risk. Copper For Commercial is currently generating about 0.09 per unit of risk. If you would invest  10,999  in Ezz Steel on December 21, 2024 and sell it today you would earn a total of  2,391  from holding Ezz Steel or generate 21.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.04%
Values	Daily Returns

Ezz Steel  vs.  Copper For Commercial

Ezz Steel

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ezz Steel are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Ezz Steel reported solid returns over the last few months and may actually be approaching a breakup point.

Copper For Commercial

Risk-Adjusted Performance

Modest

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

Pair Trading with Ezz Steel and Copper For

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

The idea behind Ezz Steel and Copper For Commercial 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.