Correlation Between Grand Investment and Egypt Aluminum

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

Diversification Opportunities for Grand Investment and Egypt Aluminum

0.83

Correlation Coefficient

Grand Investment  Egypt Aluminum

Very poor diversification

The 3 months correlation between Grand and Egypt is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Grand Investment Capital and Egypt Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egypt Aluminum 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 Egypt Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egypt Aluminum has no effect on the direction of Grand Investment i.e., Grand Investment and Egypt Aluminum go up and down completely randomly.

Pair Corralation between Grand Investment and Egypt Aluminum

Assuming the 90 days trading horizon Grand Investment is expected to generate 1.55 times less return on investment than Egypt Aluminum. But when comparing it to its historical volatility, Grand Investment Capital is 1.13 times less risky than Egypt Aluminum. It trades about 0.2 of its potential returns per unit of risk. Egypt Aluminum is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  11,736  in Egypt Aluminum on December 23, 2024 and sell it today you would earn a total of  6,129  from holding Egypt Aluminum or generate 52.22% return on investment over 90 days.

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

Grand Investment Capital  vs.  Egypt Aluminum

Grand Investment Capital

Risk-Adjusted Performance

Good

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

Egypt Aluminum

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Egypt Aluminum are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Egypt Aluminum reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grand Investment and Egypt Aluminum

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

The idea behind Grand Investment Capital and Egypt Aluminum 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.