Correlation Between Ezz Steel and Fawry For

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

Diversification Opportunities for Ezz Steel and Fawry For

0.34

Correlation Coefficient

Ezz Steel  Fawry For

Weak diversification

The 3 months correlation between Ezz and Fawry is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ezz Steel and Fawry For Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fawry For Banking 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 Fawry For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fawry For Banking has no effect on the direction of Ezz Steel i.e., Ezz Steel and Fawry For go up and down completely randomly.

Pair Corralation between Ezz Steel and Fawry For

Assuming the 90 days trading horizon Ezz Steel is expected to generate 1.11 times more return on investment than Fawry For. However, Ezz Steel is 1.11 times more volatile than Fawry For Banking. It trades about 0.12 of its potential returns per unit of risk. Fawry For Banking is currently generating about 0.04 per unit of risk. If you would invest  2,574  in Ezz Steel on September 28, 2024 and sell it today you would earn a total of  8,316  from holding Ezz Steel or generate 323.08% return on investment over 90 days.

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

Ezz Steel  vs.  Fawry For Banking

Ezz Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ezz Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Ezz Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fawry For Banking

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fawry For Banking has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Fawry 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 Fawry For

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

The idea behind Ezz Steel and Fawry For Banking 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.