Correlation Between Ezz Steel and Global Telecom

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

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

Diversification Opportunities for Ezz Steel and Global Telecom

0.0

Correlation Coefficient

Ezz Steel  Global Telecom

Pay attention - limited upside

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

Pair Corralation between Ezz Steel and Global Telecom

If you would invest  490.00  in Global Telecom Holding on September 28, 2024 and sell it today you would earn a total of  0.00  from holding Global Telecom Holding or generate 0.0% return on investment over 90 days.

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

Ezz Steel  vs.  Global Telecom Holding

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.

Global Telecom Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Ezz Steel and Global Telecom Holding 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.