Correlation Between Egyptian Transport and Qatar Natl

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

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

Diversification Opportunities for Egyptian Transport and Qatar Natl

0.68

Correlation Coefficient

Egyptian Transport  Qatar Natl

Poor diversification

The 3 months correlation between Egyptian and Qatar is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Transport and Qatar Natl Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qatar Natl Bank 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 Qatar Natl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qatar Natl Bank has no effect on the direction of Egyptian Transport i.e., Egyptian Transport and Qatar Natl go up and down completely randomly.

Pair Corralation between Egyptian Transport and Qatar Natl

Assuming the 90 days trading horizon Egyptian Transport is expected to generate 1.99 times more return on investment than Qatar Natl. However, Egyptian Transport is 1.99 times more volatile than Qatar Natl Bank. It trades about 0.16 of its potential returns per unit of risk. Qatar Natl Bank is currently generating about 0.09 per unit of risk. If you would invest  408.00  in Egyptian Transport on October 10, 2024 and sell it today you would earn a total of  126.00  from holding Egyptian Transport or generate 30.88% return on investment over 90 days.

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

Egyptian Transport  vs.  Qatar Natl Bank

Egyptian Transport

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Egyptian Transport are ranked lower than 12 (%) 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.

Qatar Natl Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qatar Natl Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Qatar Natl may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Egyptian Transport and Qatar Natl

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

The idea behind Egyptian Transport and Qatar Natl Bank 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 CEOs Directory module to screen CEOs from public companies around the world.