Correlation Between Sidi Kerir and Egyptian Transport

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

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

Diversification Opportunities for Sidi Kerir and Egyptian Transport

-0.61

Correlation Coefficient

Sidi Kerir  Egyptian Transport

Excellent diversification

The 3 months correlation between Sidi and Egyptian is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sidi Kerir Petrochemicals and Egyptian Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Transport and Sidi Kerir 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 Sidi Kerir Petrochemicals are associated (or correlated) with Egyptian Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Transport has no effect on the direction of Sidi Kerir i.e., Sidi Kerir and Egyptian Transport go up and down completely randomly.

Pair Corralation between Sidi Kerir and Egyptian Transport

Assuming the 90 days trading horizon Sidi Kerir Petrochemicals is expected to under-perform the Egyptian Transport. But the stock apears to be less risky and, when comparing its historical volatility, Sidi Kerir Petrochemicals is 1.22 times less risky than Egyptian Transport. The stock trades about -0.19 of its potential returns per unit of risk. The Egyptian Transport is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  413.00  in Egyptian Transport on September 17, 2024 and sell it today you would earn a total of  164.00  from holding Egyptian Transport or generate 39.71% return on investment over 90 days.

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

Sidi Kerir Petrochemicals  vs.  Egyptian Transport

Sidi Kerir Petrochemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sidi Kerir Petrochemicals 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Egyptian Transport

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Egyptian Transport are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Egyptian Transport reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sidi Kerir and Egyptian Transport

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

The idea behind Sidi Kerir Petrochemicals and Egyptian Transport 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.