Correlation Between El Nasr and Contact Financial
Can any of the company-specific risk be diversified away by investing in both El Nasr and Contact 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 El Nasr and Contact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Nasr Clothes and Contact Financial Holding, you can compare the effects of market volatilities on El Nasr and Contact 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 El Nasr with a short position of Contact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Nasr and Contact Financial.
Diversification Opportunities for El Nasr and Contact Financial
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between KABO and Contact is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding El Nasr Clothes and Contact Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contact Financial Holding and El Nasr 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 El Nasr Clothes are associated (or correlated) with Contact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contact Financial Holding has no effect on the direction of El Nasr i.e., El Nasr and Contact Financial go up and down completely randomly.
Pair Corralation between El Nasr and Contact Financial
Assuming the 90 days trading horizon El Nasr Clothes is expected to generate 0.8 times more return on investment than Contact Financial. However, El Nasr Clothes is 1.25 times less risky than Contact Financial. It trades about 0.24 of its potential returns per unit of risk. Contact Financial Holding is currently generating about 0.06 per unit of risk. If you would invest 263.00 in El Nasr Clothes on September 15, 2024 and sell it today you would earn a total of 128.00 from holding El Nasr Clothes or generate 48.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
El Nasr Clothes vs. Contact Financial Holding
Performance |
Timeline |
El Nasr Clothes |
Contact Financial Holding |
El Nasr and Contact Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with El Nasr and Contact Financial
The main advantage of trading using opposite El Nasr and Contact Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Nasr position performs unexpectedly, Contact 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 Contact Financial will offset losses from the drop in Contact Financial's long position.El Nasr vs. Paint Chemicals Industries | El Nasr vs. Reacap Financial Investments | El Nasr vs. Egyptians For Investment | El Nasr vs. Misr Oils Soap |
Contact Financial vs. Paint Chemicals Industries | Contact Financial vs. Reacap Financial Investments | Contact Financial vs. Egyptians For Investment | Contact Financial vs. Misr Oils Soap |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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