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

0.2

Correlation Coefficient

Telecom Egypt  Al Khair

Modest diversification

The 3 months correlation between Telecom and KRDI is 0.2. 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 1.91 times less return on investment than Al Khair. But when comparing it to its historical volatility, Telecom Egypt is 1.66 times less risky than Al Khair. It trades about 0.06 of its potential returns per unit of risk. Al Khair River is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Al Khair River on December 4, 2024 and sell it today you would earn a total of  33.00  from holding Al Khair River or generate 126.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.74%
Values	Daily Returns

Telecom Egypt  vs.  Al Khair River

Telecom Egypt

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Egypt are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Telecom Egypt reported solid returns over the last few months and may actually be approaching a breakup point.

Al Khair River

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Al Khair River are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Al Khair may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

The idea behind Telecom Egypt and Al Khair River 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.