Correlation Between Egyptian Transport and El Ahli

Can any of the company-specific risk be diversified away by investing in both Egyptian Transport and El Ahli 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 Egyptian Transport and El Ahli into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Egyptian Transport and El Ahli Investment, you can compare the effects of market volatilities on Egyptian Transport and El Ahli 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 Egyptian Transport with a short position of El Ahli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Transport and El Ahli.

Diversification Opportunities for Egyptian Transport and El Ahli

0.75

Correlation Coefficient

Egyptian Transport  El Ahli

Poor diversification

The 3 months correlation between Egyptian and AFDI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Transport and El Ahli Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Ahli Investment and Egyptian Transport 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 Egyptian Transport are associated (or correlated) with El Ahli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Ahli Investment has no effect on the direction of Egyptian Transport i.e., Egyptian Transport and El Ahli go up and down completely randomly.

Pair Corralation between Egyptian Transport and El Ahli

Assuming the 90 days trading horizon Egyptian Transport is expected to under-perform the El Ahli. In addition to that, Egyptian Transport is 1.33 times more volatile than El Ahli Investment. It trades about -0.13 of its total potential returns per unit of risk. El Ahli Investment is currently generating about -0.04 per unit of volatility. If you would invest  3,003  in El Ahli Investment on December 24, 2024 and sell it today you would lose (124.00) from holding El Ahli Investment or give up 4.13% of portfolio value over 90 days.

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

Egyptian Transport  vs.  El Ahli Investment

Egyptian Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days Egyptian Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

El Ahli Investment

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Egyptian Transport and El Ahli

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

The idea behind Egyptian Transport and El Ahli Investment 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.