Correlation Between Orascom Construction and Juhayna Food

Can any of the company-specific risk be diversified away by investing in both Orascom Construction and Juhayna Food 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 Juhayna Food 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 Juhayna Food Industries, you can compare the effects of market volatilities on Orascom Construction and Juhayna Food 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 Juhayna Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orascom Construction and Juhayna Food.

Diversification Opportunities for Orascom Construction and Juhayna Food

0.52

Correlation Coefficient

Orascom Construction  Juhayna Food

Very weak diversification

The 3 months correlation between Orascom and Juhayna is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Orascom Construction PLC and Juhayna Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juhayna Food Industries 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 Juhayna Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juhayna Food Industries has no effect on the direction of Orascom Construction i.e., Orascom Construction and Juhayna Food go up and down completely randomly.

Pair Corralation between Orascom Construction and Juhayna Food

Assuming the 90 days trading horizon Orascom Construction PLC is expected to under-perform the Juhayna Food. But the stock apears to be less risky and, when comparing its historical volatility, Orascom Construction PLC is 1.69 times less risky than Juhayna Food. The stock trades about -0.2 of its potential returns per unit of risk. The Juhayna Food Industries is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,178  in Juhayna Food Industries on October 25, 2024 and sell it today you would earn a total of  302.00  from holding Juhayna Food Industries or generate 9.5% return on investment over 90 days.

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

Orascom Construction PLC  vs.  Juhayna Food Industries

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.

Juhayna Food Industries

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Juhayna Food Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Juhayna Food reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orascom Construction and Juhayna Food

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

The idea behind Orascom Construction PLC and Juhayna Food Industries 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.