Correlation Between Egyptian Transport and Sidi Kerir

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

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

Diversification Opportunities for Egyptian Transport and Sidi Kerir

-0.61

Correlation Coefficient

Egyptian Transport  Sidi Kerir

Excellent diversification

The 3 months correlation between Egyptian and Sidi is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Transport and Sidi Kerir Petrochemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidi Kerir Petrochemicals 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 Sidi Kerir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidi Kerir Petrochemicals has no effect on the direction of Egyptian Transport i.e., Egyptian Transport and Sidi Kerir go up and down completely randomly.

Pair Corralation between Egyptian Transport and Sidi Kerir

Assuming the 90 days trading horizon Egyptian Transport is expected to generate 1.22 times more return on investment than Sidi Kerir. However, Egyptian Transport is 1.22 times more volatile than Sidi Kerir Petrochemicals. It trades about 0.2 of its potential returns per unit of risk. Sidi Kerir Petrochemicals is currently generating about -0.19 per unit of risk. If you would invest  413.00  in Egyptian Transport on September 17, 2024 and sell it today you would earn a total of  164.00  from holding Egyptian Transport or generate 39.71% return on investment over 90 days.

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

Egyptian Transport  vs.  Sidi Kerir Petrochemicals

Egyptian Transport

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Egyptian Transport are ranked lower than 15 (%) 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.

Sidi Kerir Petrochemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sidi Kerir Petrochemicals 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Egyptian Transport and Sidi Kerir

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

The idea behind Egyptian Transport and Sidi Kerir Petrochemicals 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.