Correlation Between Industrial Engineering and Egyptian Financial

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

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

Diversification Opportunities for Industrial Engineering and Egyptian Financial

-0.08

Correlation Coefficient

Industrial Engineering  Egyptian Financial

Good diversification

The 3 months correlation between Industrial and Egyptian is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Engineering Project and Egyptian Financial Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Financial and Industrial Engineering 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 Industrial Engineering Projects 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 Industrial Engineering i.e., Industrial Engineering and Egyptian Financial go up and down completely randomly.

Pair Corralation between Industrial Engineering and Egyptian Financial

Assuming the 90 days trading horizon Industrial Engineering Projects is expected to generate 3.02 times more return on investment than Egyptian Financial. However, Industrial Engineering is 3.02 times more volatile than Egyptian Financial Industrial. It trades about 0.16 of its potential returns per unit of risk. Egyptian Financial Industrial is currently generating about -0.01 per unit of risk. If you would invest  25.00  in Industrial Engineering Projects on December 26, 2024 and sell it today you would earn a total of  10.00  from holding Industrial Engineering Projects or generate 40.0% return on investment over 90 days.

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

Industrial Engineering Project  vs.  Egyptian Financial Industrial

Industrial Engineering

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Engineering Projects are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Industrial Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

Egyptian Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Egyptian Financial Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Egyptian 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 Industrial Engineering and Egyptian Financial

The main advantage of trading using opposite Industrial Engineering and Egyptian Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Engineering 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 Industrial Engineering Projects 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.