Correlation Between Nozha International and Commercial International

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

By analyzing existing cross correlation between Nozha International Hospital and Commercial International Bank Egypt, you can compare the effects of market volatilities on Nozha International and Commercial International 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 Nozha International with a short position of Commercial International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nozha International and Commercial International.

Diversification Opportunities for Nozha International and Commercial International

-0.29

Correlation Coefficient

Nozha International  Commercial International

Very good diversification

The 3 months correlation between Nozha and Commercial is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nozha International Hospital and Commercial International Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial International and Nozha International 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 Nozha International Hospital are associated (or correlated) with Commercial International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial International has no effect on the direction of Nozha International i.e., Nozha International and Commercial International go up and down completely randomly.

Pair Corralation between Nozha International and Commercial International

Assuming the 90 days trading horizon Nozha International Hospital is expected to generate 3.05 times more return on investment than Commercial International. However, Nozha International is 3.05 times more volatile than Commercial International Bank Egypt. It trades about -0.1 of its potential returns per unit of risk. Commercial International Bank Egypt is currently generating about -0.35 per unit of risk. If you would invest  899.00  in Nozha International Hospital on October 20, 2024 and sell it today you would lose (87.00) from holding Nozha International Hospital or give up 9.68% of portfolio value over 90 days.

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

Nozha International Hospital  vs.  Commercial International Bank

Nozha International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nozha International Hospital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Nozha International reported solid returns over the last few months and may actually be approaching a breakup point.

Commercial International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nozha International and Commercial International

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

The idea behind Nozha International Hospital and Commercial International Bank 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.