Correlation Between Telecom Egypt and Al Khair
Can any of the company-specific risk be diversified away by investing in both Telecom Egypt and Al Khair 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 Telecom Egypt and Al Khair into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Egypt and Al Khair River, you can compare the effects of market volatilities on Telecom Egypt and Al Khair 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 Telecom Egypt with a short position of Al Khair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Egypt and Al Khair.
Diversification Opportunities for Telecom Egypt and Al Khair
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Telecom and KRDI is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Egypt and Al Khair River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Khair River and Telecom Egypt 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 Telecom Egypt are associated (or correlated) with Al Khair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Khair River has no effect on the direction of Telecom Egypt i.e., Telecom Egypt and Al Khair go up and down completely randomly.
Pair Corralation between Telecom Egypt and Al Khair
Assuming the 90 days trading horizon Telecom Egypt is expected to generate 1.71 times less return on investment than Al Khair. But when comparing it to its historical volatility, Telecom Egypt is 1.6 times less risky than Al Khair. It trades about 0.09 of its potential returns per unit of risk. Al Khair River is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 55.00 in Al Khair River on December 30, 2024 and sell it today you would earn a total of 6.00 from holding Al Khair River or generate 10.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Telecom Egypt vs. Al Khair River
Performance |
Timeline |
Telecom Egypt |
Al Khair River |
Telecom Egypt and Al Khair Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Telecom Egypt and Al Khair
The main advantage of trading using opposite Telecom Egypt and Al Khair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Egypt position performs unexpectedly, Al Khair 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 Al Khair will offset losses from the drop in Al Khair's long position.Telecom Egypt vs. Paint Chemicals Industries | Telecom Egypt vs. Saudi Egyptian Investment | Telecom Egypt vs. Lotus For Agricultural | Telecom Egypt vs. Egyptians For Investment |
Al Khair vs. Al Arafa Investment | Al Khair vs. Natural Gas Mining | Al Khair vs. Mohandes Insurance | Al Khair vs. Orascom Construction PLC |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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