Correlation Between Iron and Telecom Egypt

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

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

Diversification Opportunities for Iron and Telecom Egypt

0.08

Correlation Coefficient

Iron  Telecom Egypt

Significant diversification

The 3 months correlation between Iron and Telecom is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Iron And Steel and Telecom Egypt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Egypt and 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 Iron And Steel are associated (or correlated) with Telecom Egypt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Egypt has no effect on the direction of Iron i.e., Iron and Telecom Egypt go up and down completely randomly.

Pair Corralation between Iron and Telecom Egypt

Assuming the 90 days trading horizon Iron And Steel is expected to generate 1.14 times more return on investment than Telecom Egypt. However, Iron is 1.14 times more volatile than Telecom Egypt. It trades about 0.1 of its potential returns per unit of risk. Telecom Egypt is currently generating about 0.09 per unit of risk. If you would invest  397.00  in Iron And Steel on October 25, 2024 and sell it today you would earn a total of  11.00  from holding Iron And Steel or generate 2.77% return on investment over 90 days.

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

Iron And Steel  vs.  Telecom Egypt

Iron And Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron And 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Telecom Egypt

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Egypt are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Telecom Egypt is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Iron and Telecom Egypt

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

The idea behind Iron And Steel and Telecom Egypt 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.