Correlation Between Ezz Steel and International Agricultural

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

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

Diversification Opportunities for Ezz Steel and International Agricultural

0.65

Correlation Coefficient

Ezz Steel  International Agricultural

Poor diversification

The 3 months correlation between Ezz and International is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ezz Steel and International Agricultural Pro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Agricultural 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 International Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Agricultural has no effect on the direction of Ezz Steel i.e., Ezz Steel and International Agricultural go up and down completely randomly.

Pair Corralation between Ezz Steel and International Agricultural

Assuming the 90 days trading horizon Ezz Steel is expected to generate 0.81 times more return on investment than International Agricultural. However, Ezz Steel is 1.24 times less risky than International Agricultural. It trades about 0.68 of its potential returns per unit of risk. International Agricultural Products is currently generating about 0.41 per unit of risk. If you would invest  10,500  in Ezz Steel on October 20, 2024 and sell it today you would earn a total of  2,500  from holding Ezz Steel or generate 23.81% return on investment over 90 days.

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

Ezz Steel  vs.  International Agricultural Pro

Ezz Steel

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ezz Steel are ranked lower than 13 (%) 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.

International Agricultural

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Agricultural Products are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, International Agricultural reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ezz Steel and International Agricultural

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

The idea behind Ezz Steel and International Agricultural Products 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.