Correlation Between Egyptian Transport and B Investments

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

By analyzing existing cross correlation between Egyptian Transport and B Investments Holding, you can compare the effects of market volatilities on Egyptian Transport and B Investments 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 B Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Transport and B Investments.

Diversification Opportunities for Egyptian Transport and B Investments

0.76

Correlation Coefficient

Egyptian Transport  B Investments

Poor diversification

The 3 months correlation between Egyptian and BINV is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Transport and B Investments Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Investments Holding 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 B Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Investments Holding has no effect on the direction of Egyptian Transport i.e., Egyptian Transport and B Investments go up and down completely randomly.

Pair Corralation between Egyptian Transport and B Investments

Assuming the 90 days trading horizon Egyptian Transport is expected to under-perform the B Investments. In addition to that, Egyptian Transport is 4.04 times more volatile than B Investments Holding. It trades about -0.07 of its total potential returns per unit of risk. B Investments Holding is currently generating about -0.14 per unit of volatility. If you would invest  2,539  in B Investments Holding on October 9, 2024 and sell it today you would lose (55.00) from holding B Investments Holding or give up 2.17% 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.  B Investments Holding

Egyptian Transport

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Egyptian Transport are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Egyptian Transport reported solid returns over the last few months and may actually be approaching a breakup point.

B Investments Holding

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in B Investments Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, B Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Egyptian Transport and B Investments

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

The idea behind Egyptian Transport and B Investments 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.