Correlation Between Zahraa Maadi and Telecom Egypt

Can any of the company-specific risk be diversified away by investing in both Zahraa Maadi and Telecom Egypt 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 Zahraa Maadi and Telecom Egypt into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zahraa Maadi Investment and Telecom Egypt, you can compare the effects of market volatilities on Zahraa Maadi and Telecom Egypt 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 Zahraa Maadi with a short position of Telecom Egypt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zahraa Maadi and Telecom Egypt.

Diversification Opportunities for Zahraa Maadi and Telecom Egypt

-0.01

Correlation Coefficient

Zahraa Maadi  Telecom Egypt

Good diversification

The 3 months correlation between Zahraa and Telecom is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Zahraa Maadi Investment and Telecom Egypt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Egypt and Zahraa Maadi 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 Zahraa Maadi Investment are associated (or correlated) with Telecom Egypt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Egypt has no effect on the direction of Zahraa Maadi i.e., Zahraa Maadi and Telecom Egypt go up and down completely randomly.

Pair Corralation between Zahraa Maadi and Telecom Egypt

Assuming the 90 days trading horizon Zahraa Maadi Investment is expected to under-perform the Telecom Egypt. In addition to that, Zahraa Maadi is 1.77 times more volatile than Telecom Egypt. It trades about -0.23 of its total potential returns per unit of risk. Telecom Egypt is currently generating about 0.07 per unit of volatility. If you would invest  3,340  in Telecom Egypt on October 20, 2024 and sell it today you would earn a total of  51.00  from holding Telecom Egypt or generate 1.53% return on investment over 90 days.

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

Zahraa Maadi Investment  vs.  Telecom Egypt

Zahraa Maadi Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zahraa Maadi Investment 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Telecom Egypt

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Egypt are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Telecom Egypt may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Zahraa Maadi and Telecom Egypt

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

The idea behind Zahraa Maadi Investment and Telecom Egypt 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.