Correlation Between Saudi Egyptian and Pyramisa Hotels

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

Diversification Opportunities for Saudi Egyptian and Pyramisa Hotels

-0.15

Correlation Coefficient

Saudi Egyptian  Pyramisa Hotels

Good diversification

The 3 months correlation between Saudi and Pyramisa is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Saudi Egyptian Investment and Pyramisa Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyramisa Hotels 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 Pyramisa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyramisa Hotels has no effect on the direction of Saudi Egyptian i.e., Saudi Egyptian and Pyramisa Hotels go up and down completely randomly.

Pair Corralation between Saudi Egyptian and Pyramisa Hotels

Assuming the 90 days trading horizon Saudi Egyptian Investment is expected to generate 3.08 times more return on investment than Pyramisa Hotels. However, Saudi Egyptian is 3.08 times more volatile than Pyramisa Hotels. It trades about 0.03 of its potential returns per unit of risk. Pyramisa Hotels is currently generating about -0.17 per unit of risk. If you would invest  6,200  in Saudi Egyptian Investment on December 29, 2024 and sell it today you would earn a total of  94.00  from holding Saudi Egyptian Investment or generate 1.52% 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.  Pyramisa Hotels

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.

Pyramisa Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pyramisa Hotels 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Saudi Egyptian and Pyramisa Hotels

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

The idea behind Saudi Egyptian Investment and Pyramisa Hotels 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 Stocks Directory module to find actively traded stocks across global markets.