Correlation Between Egyptian Media and Egyptian Financial

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

By analyzing existing cross correlation between Egyptian Media Production and Egyptian Financial Industrial, you can compare the effects of market volatilities on Egyptian Media and Egyptian 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 Egyptian Media with a short position of Egyptian Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Media and Egyptian Financial.

Diversification Opportunities for Egyptian Media and Egyptian Financial

-0.61

Correlation Coefficient

Egyptian Media  Egyptian Financial

Excellent diversification

The 3 months correlation between Egyptian and Egyptian is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Media Production and Egyptian Financial Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Financial and Egyptian Media 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 Media Production are associated (or correlated) with Egyptian Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Financial has no effect on the direction of Egyptian Media i.e., Egyptian Media and Egyptian Financial go up and down completely randomly.

Pair Corralation between Egyptian Media and Egyptian Financial

Assuming the 90 days trading horizon Egyptian Media Production is expected to under-perform the Egyptian Financial. In addition to that, Egyptian Media is 1.74 times more volatile than Egyptian Financial Industrial. It trades about -0.18 of its total potential returns per unit of risk. Egyptian Financial Industrial is currently generating about 0.34 per unit of volatility. If you would invest  14,483  in Egyptian Financial Industrial on October 9, 2024 and sell it today you would earn a total of  1,197  from holding Egyptian Financial Industrial or generate 8.26% return on investment over 90 days.

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

Egyptian Media Production  vs.  Egyptian Financial Industrial

Egyptian Media Production

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Egyptian Media Production has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Egyptian Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Egyptian Financial Industrial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Egyptian Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Egyptian Media and Egyptian Financial

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

The idea behind Egyptian Media Production and Egyptian Financial Industrial 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.