Correlation Between Saudi Egyptian and El Nasr

Can any of the company-specific risk be diversified away by investing in both Saudi Egyptian and El Nasr 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 El Nasr 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 El Nasr Clothes, you can compare the effects of market volatilities on Saudi Egyptian and El Nasr 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 El Nasr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saudi Egyptian and El Nasr.

Diversification Opportunities for Saudi Egyptian and El Nasr

0.2

Correlation Coefficient

Saudi Egyptian  El Nasr

Modest diversification

The 3 months correlation between Saudi and KABO is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Saudi Egyptian Investment and El Nasr Clothes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Nasr Clothes 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 El Nasr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Nasr Clothes has no effect on the direction of Saudi Egyptian i.e., Saudi Egyptian and El Nasr go up and down completely randomly.

Pair Corralation between Saudi Egyptian and El Nasr

Assuming the 90 days trading horizon Saudi Egyptian Investment is expected to under-perform the El Nasr. But the stock apears to be less risky and, when comparing its historical volatility, Saudi Egyptian Investment is 5.04 times less risky than El Nasr. The stock trades about -0.08 of its potential returns per unit of risk. The El Nasr Clothes is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  282.00  in El Nasr Clothes on September 17, 2024 and sell it today you would earn a total of  109.00  from holding El Nasr Clothes or generate 38.65% 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.  El Nasr Clothes

Saudi Egyptian Investment

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Saudi Egyptian Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Saudi Egyptian is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

El Nasr Clothes

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in El Nasr Clothes are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, El Nasr reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saudi Egyptian and El Nasr

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

The idea behind Saudi Egyptian Investment and El Nasr Clothes 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.