Correlation Between Egyptian Iron and Qatar Natl

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

Diversification Opportunities for Egyptian Iron and Qatar Natl

0.27

Correlation Coefficient

Egyptian Iron  Qatar Natl

Modest diversification

The 3 months correlation between Egyptian and Qatar is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Iron Steel and Qatar Natl Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qatar Natl Bank 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 Qatar Natl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qatar Natl Bank has no effect on the direction of Egyptian Iron i.e., Egyptian Iron and Qatar Natl go up and down completely randomly.

Pair Corralation between Egyptian Iron and Qatar Natl

Assuming the 90 days trading horizon Egyptian Iron Steel is expected to under-perform the Qatar Natl. In addition to that, Egyptian Iron is 2.06 times more volatile than Qatar Natl Bank. It trades about -0.14 of its total potential returns per unit of risk. Qatar Natl Bank is currently generating about -0.12 per unit of volatility. If you would invest  3,446  in Qatar Natl Bank on December 4, 2024 and sell it today you would lose (264.00) from holding Qatar Natl Bank or give up 7.66% of portfolio value over 90 days.

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

Egyptian Iron Steel  vs.  Qatar Natl Bank

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 fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Qatar Natl Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qatar Natl Bank 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.

Pair Trading with Egyptian Iron and Qatar Natl

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

The idea behind Egyptian Iron Steel and Qatar Natl Bank 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.