Correlation Between Orascom Financial and Industrial Engineering

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

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

Diversification Opportunities for Orascom Financial and Industrial Engineering

0.24

Correlation Coefficient

Orascom Financial  Industrial Engineering

Modest diversification

The 3 months correlation between Orascom and Industrial is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Orascom Financial Holding and Industrial Engineering Project in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Engineering and Orascom Financial 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 Orascom Financial Holding are associated (or correlated) with Industrial Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Engineering has no effect on the direction of Orascom Financial i.e., Orascom Financial and Industrial Engineering go up and down completely randomly.

Pair Corralation between Orascom Financial and Industrial Engineering

Assuming the 90 days trading horizon Orascom Financial Holding is expected to generate 1.42 times more return on investment than Industrial Engineering. However, Orascom Financial is 1.42 times more volatile than Industrial Engineering Projects. It trades about 0.13 of its potential returns per unit of risk. Industrial Engineering Projects is currently generating about 0.01 per unit of risk. If you would invest  33.00  in Orascom Financial Holding on September 15, 2024 and sell it today you would earn a total of  7.00  from holding Orascom Financial Holding or generate 21.21% return on investment over 90 days.

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

Orascom Financial Holding  vs.  Industrial Engineering Project

Orascom Financial Holding

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orascom Financial Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Orascom Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Industrial Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Orascom Financial and Industrial Engineering

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

The idea behind Orascom Financial Holding and Industrial Engineering Projects 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 Commodity Directory module to find actively traded commodities issued by global exchanges.