Correlation Between Orascom Construction and Ismailia National

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

By analyzing existing cross correlation between Orascom Construction PLC and Ismailia National Food, you can compare the effects of market volatilities on Orascom Construction and Ismailia National 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 Construction with a short position of Ismailia National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orascom Construction and Ismailia National.

Diversification Opportunities for Orascom Construction and Ismailia National

-0.37

Correlation Coefficient

Orascom Construction  Ismailia National

Very good diversification

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

Pair Corralation between Orascom Construction and Ismailia National

Assuming the 90 days trading horizon Orascom Construction PLC is expected to under-perform the Ismailia National. But the stock apears to be less risky and, when comparing its historical volatility, Orascom Construction PLC is 5.65 times less risky than Ismailia National. The stock trades about -0.28 of its potential returns per unit of risk. The Ismailia National Food is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  6,271  in Ismailia National Food on October 22, 2024 and sell it today you would earn a total of  4,380  from holding Ismailia National Food or generate 69.85% return on investment over 90 days.

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

Orascom Construction PLC  vs.  Ismailia National Food

Orascom Construction PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orascom Construction PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Ismailia National Food

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ismailia National Food are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Ismailia National reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orascom Construction and Ismailia National

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

The idea behind Orascom Construction PLC and Ismailia National Food 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.