Correlation Between Gadwa For and Orascom Investment

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

By analyzing existing cross correlation between Gadwa For Industrial and Orascom Investment Holding, you can compare the effects of market volatilities on Gadwa For and Orascom Investment 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 Gadwa For with a short position of Orascom Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gadwa For and Orascom Investment.

Diversification Opportunities for Gadwa For and Orascom Investment

-0.81

Correlation Coefficient

Gadwa For  Orascom Investment

Pay attention - limited upside

The 3 months correlation between Gadwa and Orascom is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Gadwa For Industrial and Orascom Investment Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orascom Investment and Gadwa 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 Gadwa For Industrial are associated (or correlated) with Orascom Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orascom Investment has no effect on the direction of Gadwa For i.e., Gadwa For and Orascom Investment go up and down completely randomly.

Pair Corralation between Gadwa For and Orascom Investment

Assuming the 90 days trading horizon Gadwa For Industrial is expected to under-perform the Orascom Investment. But the stock apears to be less risky and, when comparing its historical volatility, Gadwa For Industrial is 1.73 times less risky than Orascom Investment. The stock trades about -0.25 of its potential returns per unit of risk. The Orascom Investment Holding is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  47.00  in Orascom Investment Holding on October 8, 2024 and sell it today you would earn a total of  9.00  from holding Orascom Investment Holding or generate 19.15% return on investment over 90 days.

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

Gadwa For Industrial  vs.  Orascom Investment Holding

Gadwa For Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gadwa For Industrial 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Orascom Investment

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orascom Investment Holding are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Orascom Investment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gadwa For and Orascom Investment

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

The idea behind Gadwa For Industrial and Orascom Investment 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.