Correlation Between Egyptian Iron and El Nasr

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

Diversification Opportunities for Egyptian Iron and El Nasr

-0.76

Correlation Coefficient

Egyptian Iron  El Nasr

Pay attention - limited upside

The 3 months correlation between Egyptian and KABO is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Iron Steel and El Nasr Clothes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Nasr Clothes 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 El Nasr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Nasr Clothes has no effect on the direction of Egyptian Iron i.e., Egyptian Iron and El Nasr go up and down completely randomly.

Pair Corralation between Egyptian Iron and El Nasr

Assuming the 90 days trading horizon Egyptian Iron Steel is expected to under-perform the El Nasr. But the stock apears to be less risky and, when comparing its historical volatility, Egyptian Iron Steel is 1.36 times less risky than El Nasr. The stock trades about -0.05 of its potential returns per unit of risk. The El Nasr Clothes is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  379.00  in El Nasr Clothes on December 29, 2024 and sell it today you would earn a total of  108.00  from holding El Nasr Clothes or generate 28.5% return on investment over 90 days.

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

Egyptian Iron Steel  vs.  El Nasr Clothes

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.

El Nasr Clothes

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in El Nasr Clothes are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, El Nasr reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Egyptian Iron and El Nasr

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

The idea behind Egyptian Iron Steel and El Nasr Clothes 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.