Correlation Between Grand Investment and Egyptian Financial

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

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

Diversification Opportunities for Grand Investment and Egyptian Financial

0.45

Correlation Coefficient

Grand Investment  Egyptian Financial

Very weak diversification

The 3 months correlation between Grand and Egyptian is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Grand Investment Capital and Egyptian Financial Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Financial and Grand Investment 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 Grand Investment Capital are associated (or correlated) with Egyptian Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Financial has no effect on the direction of Grand Investment i.e., Grand Investment and Egyptian Financial go up and down completely randomly.

Pair Corralation between Grand Investment and Egyptian Financial

Assuming the 90 days trading horizon Grand Investment Capital is expected to generate 1.48 times more return on investment than Egyptian Financial. However, Grand Investment is 1.48 times more volatile than Egyptian Financial Industrial. It trades about 0.25 of its potential returns per unit of risk. Egyptian Financial Industrial is currently generating about 0.05 per unit of risk. If you would invest  912.00  in Grand Investment Capital on December 5, 2024 and sell it today you would earn a total of  306.00  from holding Grand Investment Capital or generate 33.55% return on investment over 90 days.

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

Grand Investment Capital  vs.  Egyptian Financial Industrial

Grand Investment Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Investment Capital are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Grand Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Egyptian Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Egyptian Financial Industrial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Egyptian Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Grand Investment and Egyptian Financial

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

The idea behind Grand Investment Capital and Egyptian Financial Industrial 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.