Correlation Between Fawry For and Orascom Financial

Can any of the company-specific risk be diversified away by investing in both Fawry For and Orascom 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 Orascom 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 Orascom Financial Holding, you can compare the effects of market volatilities on Fawry For and Orascom 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 Orascom Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fawry For and Orascom Financial.

Diversification Opportunities for Fawry For and Orascom Financial

-0.35

Correlation Coefficient

Fawry For  Orascom Financial

Very good diversification

The 3 months correlation between Fawry and Orascom is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fawry For Banking and Orascom Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orascom Financial Holding 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 Orascom Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orascom Financial Holding has no effect on the direction of Fawry For i.e., Fawry For and Orascom Financial go up and down completely randomly.

Pair Corralation between Fawry For and Orascom Financial

Assuming the 90 days trading horizon Fawry For Banking is expected to generate 0.79 times more return on investment than Orascom Financial. However, Fawry For Banking is 1.27 times less risky than Orascom Financial. It trades about 0.04 of its potential returns per unit of risk. Orascom Financial Holding is currently generating about -0.04 per unit of risk. If you would invest  833.00  in Fawry For Banking on December 4, 2024 and sell it today you would earn a total of  9.00  from holding Fawry For Banking or generate 1.08% return on investment over 90 days.

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

Fawry For Banking  vs.  Orascom Financial Holding

Fawry For Banking

Risk-Adjusted Performance

Very Weak

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

Orascom Financial Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orascom Financial Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Orascom Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fawry For and Orascom Financial

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

The idea behind Fawry For Banking and Orascom Financial 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.