Correlation Between Egyptian Iron and B Investments

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

By analyzing existing cross correlation between Egyptian Iron Steel and B Investments Holding, you can compare the effects of market volatilities on Egyptian Iron and B Investments 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 Egyptian Iron with a short position of B Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Iron and B Investments.

Diversification Opportunities for Egyptian Iron and B Investments

0.73

Correlation Coefficient

Egyptian Iron  B Investments

Poor diversification

The 3 months correlation between Egyptian and BINV is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Iron Steel and B Investments Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Investments Holding and Egyptian Iron 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 Egyptian Iron Steel are associated (or correlated) with B Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Investments Holding has no effect on the direction of Egyptian Iron i.e., Egyptian Iron and B Investments go up and down completely randomly.

Pair Corralation between Egyptian Iron and B Investments

Assuming the 90 days trading horizon Egyptian Iron Steel is expected to under-perform the B Investments. In addition to that, Egyptian Iron is 1.51 times more volatile than B Investments Holding. It trades about -0.05 of its total potential returns per unit of risk. B Investments Holding is currently generating about -0.05 per unit of volatility. If you would invest  2,442  in B Investments Holding on December 30, 2024 and sell it today you would lose (117.00) from holding B Investments Holding or give up 4.79% of portfolio value over 90 days.

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

Egyptian Iron Steel  vs.  B Investments Holding

Egyptian Iron Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Egyptian Iron Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

B Investments Holding

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Egyptian Iron and B Investments

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

The idea behind Egyptian Iron Steel and B Investments 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.