Correlation Between Egyptian Media and Faisal Islamic

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

Diversification Opportunities for Egyptian Media and Faisal Islamic

0.37

Correlation Coefficient

Egyptian Media  Faisal Islamic

Weak diversification

The 3 months correlation between Egyptian and Faisal is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Media Production and Faisal Islamic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faisal Islamic Bank 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 Faisal Islamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faisal Islamic Bank has no effect on the direction of Egyptian Media i.e., Egyptian Media and Faisal Islamic go up and down completely randomly.

Pair Corralation between Egyptian Media and Faisal Islamic

Assuming the 90 days trading horizon Egyptian Media Production is expected to under-perform the Faisal Islamic. In addition to that, Egyptian Media is 2.34 times more volatile than Faisal Islamic Bank. It trades about -0.04 of its total potential returns per unit of risk. Faisal Islamic Bank is currently generating about -0.06 per unit of volatility. If you would invest  3,946  in Faisal Islamic Bank on December 4, 2024 and sell it today you would lose (153.00) from holding Faisal Islamic Bank or give up 3.88% of portfolio value over 90 days.

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

Egyptian Media Production  vs.  Faisal Islamic Bank

Egyptian Media Production

Risk-Adjusted Performance

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 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.

Faisal Islamic Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Faisal Islamic Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Faisal Islamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Egyptian Media and Faisal Islamic

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

The idea behind Egyptian Media Production and Faisal Islamic 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.