Correlation Between Saudi Egyptian and Orascom Investment

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

Diversification Opportunities for Saudi Egyptian and Orascom Investment

-0.08

Correlation Coefficient

Saudi Egyptian  Orascom Investment

Good diversification

The 3 months correlation between Saudi and Orascom is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Saudi Egyptian Investment and Orascom Investment Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orascom Investment 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 Orascom Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orascom Investment has no effect on the direction of Saudi Egyptian i.e., Saudi Egyptian and Orascom Investment go up and down completely randomly.

Pair Corralation between Saudi Egyptian and Orascom Investment

Assuming the 90 days trading horizon Saudi Egyptian is expected to generate 2.99 times less return on investment than Orascom Investment. In addition to that, Saudi Egyptian is 1.48 times more volatile than Orascom Investment Holding. It trades about 0.03 of its total potential returns per unit of risk. Orascom Investment Holding is currently generating about 0.12 per unit of volatility. If you would invest  56.00  in Orascom Investment Holding on December 28, 2024 and sell it today you would earn a total of  10.00  from holding Orascom Investment Holding or generate 17.86% return on investment over 90 days.

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

Saudi Egyptian Investment  vs.  Orascom Investment Holding

Saudi Egyptian Investment

Risk-Adjusted Performance

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 fragile technical and fundamental indicators, Saudi Egyptian may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Orascom Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orascom Investment Holding are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Orascom Investment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saudi Egyptian and Orascom Investment

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

The idea behind Saudi Egyptian Investment and Orascom Investment Holding 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.