Correlation Between Sidi Kerir and Export Development

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

Diversification Opportunities for Sidi Kerir and Export Development

-0.57

Correlation Coefficient

Sidi Kerir  Export Development

Excellent diversification

The 3 months correlation between Sidi and Export is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sidi Kerir Petrochemicals and Export Development Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Export Development Bank 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 Export Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Export Development Bank has no effect on the direction of Sidi Kerir i.e., Sidi Kerir and Export Development go up and down completely randomly.

Pair Corralation between Sidi Kerir and Export Development

Assuming the 90 days trading horizon Sidi Kerir Petrochemicals is expected to generate 1.71 times more return on investment than Export Development. However, Sidi Kerir is 1.71 times more volatile than Export Development Bank. It trades about 0.22 of its potential returns per unit of risk. Export Development Bank is currently generating about -0.17 per unit of risk. If you would invest  1,903  in Sidi Kerir Petrochemicals on October 22, 2024 and sell it today you would earn a total of  167.00  from holding Sidi Kerir Petrochemicals or generate 8.78% return on investment over 90 days.

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

Sidi Kerir Petrochemicals  vs.  Export Development Bank

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 nearly stable technical and fundamental indicators, Sidi Kerir is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Export Development Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Export Development Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Export Development may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sidi Kerir and Export Development

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

The idea behind Sidi Kerir Petrochemicals and Export Development Bank 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.