Correlation Between Fawry For and Act Financial

Can any of the company-specific risk be diversified away by investing in both Fawry For and Act Financial 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 Fawry For and Act Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fawry For Banking and Act Financial, you can compare the effects of market volatilities on Fawry For and Act Financial 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 Fawry For with a short position of Act Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fawry For and Act Financial.

Diversification Opportunities for Fawry For and Act Financial

-0.56

Correlation Coefficient

Fawry For  Act Financial

Excellent diversification

The 3 months correlation between Fawry and Act is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fawry For Banking and Act Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Act Financial and Fawry For 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 Fawry For Banking are associated (or correlated) with Act Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Act Financial has no effect on the direction of Fawry For i.e., Fawry For and Act Financial go up and down completely randomly.

Pair Corralation between Fawry For and Act Financial

Assuming the 90 days trading horizon Fawry For Banking is expected to generate 0.89 times more return on investment than Act Financial. However, Fawry For Banking is 1.12 times less risky than Act Financial. It trades about 0.13 of its potential returns per unit of risk. Act Financial is currently generating about 0.01 per unit of risk. If you would invest  843.00  in Fawry For Banking on December 29, 2024 and sell it today you would earn a total of  117.00  from holding Fawry For Banking or generate 13.88% return on investment over 90 days.

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

Fawry For Banking  vs.  Act Financial

Fawry For Banking

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fawry For Banking are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Fawry For reported solid returns over the last few months and may actually be approaching a breakup point.

Act Financial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Fawry For and Act Financial

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

The idea behind Fawry For Banking and Act Financial 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.