Correlation Between Egyptian Transport and Mohandes Insurance

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

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

Diversification Opportunities for Egyptian Transport and Mohandes Insurance

0.34

Correlation Coefficient

Egyptian Transport  Mohandes Insurance

Weak diversification

The 3 months correlation between Egyptian and Mohandes is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Transport and Mohandes Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mohandes Insurance 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 Mohandes Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mohandes Insurance has no effect on the direction of Egyptian Transport i.e., Egyptian Transport and Mohandes Insurance go up and down completely randomly.

Pair Corralation between Egyptian Transport and Mohandes Insurance

Assuming the 90 days trading horizon Egyptian Transport is expected to generate 5.9 times less return on investment than Mohandes Insurance. In addition to that, Egyptian Transport is 1.15 times more volatile than Mohandes Insurance. It trades about 0.01 of its total potential returns per unit of risk. Mohandes Insurance is currently generating about 0.05 per unit of volatility. If you would invest  2,362  in Mohandes Insurance on December 26, 2024 and sell it today you would earn a total of  135.00  from holding Mohandes Insurance or generate 5.72% return on investment over 90 days.

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

Egyptian Transport  vs.  Mohandes Insurance

Egyptian Transport

Risk-Adjusted Performance

Weak

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

Mohandes Insurance

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Egyptian Transport and Mohandes Insurance

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

The idea behind Egyptian Transport and Mohandes Insurance 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.