Correlation Between Saudi Egyptian and Act Financial

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

By analyzing existing cross correlation between Saudi Egyptian Investment and Act Financial, you can compare the effects of market volatilities on Saudi Egyptian and Act Financial 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 Saudi Egyptian with a short position of Act Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saudi Egyptian and Act Financial.

Diversification Opportunities for Saudi Egyptian and Act Financial

0.28

Correlation Coefficient

Saudi Egyptian  Act Financial

Modest diversification

The 3 months correlation between Saudi and Act is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Saudi Egyptian Investment and Act Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Act Financial and Saudi Egyptian 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 Saudi Egyptian Investment are associated (or correlated) with Act Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Act Financial has no effect on the direction of Saudi Egyptian i.e., Saudi Egyptian and Act Financial go up and down completely randomly.

Pair Corralation between Saudi Egyptian and Act Financial

Assuming the 90 days trading horizon Saudi Egyptian Investment is expected to generate 1.81 times more return on investment than Act Financial. However, Saudi Egyptian is 1.81 times more volatile than Act Financial. It trades about 0.17 of its potential returns per unit of risk. Act Financial is currently generating about 0.17 per unit of risk. If you would invest  6,482  in Saudi Egyptian Investment on October 22, 2024 and sell it today you would earn a total of  836.00  from holding Saudi Egyptian Investment or generate 12.9% return on investment over 90 days.

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

Saudi Egyptian Investment  vs.  Act Financial

Saudi Egyptian Investment

Risk-Adjusted Performance

6 of 100

Modest

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

Act Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Act Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Act Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saudi Egyptian and Act Financial

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

The idea behind Saudi Egyptian Investment and Act Financial 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.