Correlation Between Zahraa Maadi and Sidi Kerir

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

Diversification Opportunities for Zahraa Maadi and Sidi Kerir

0.14

Correlation Coefficient

Zahraa Maadi  Sidi Kerir

Average diversification

The 3 months correlation between Zahraa and Sidi is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Zahraa Maadi Investment and Sidi Kerir Petrochemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidi Kerir Petrochemicals 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 Sidi Kerir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidi Kerir Petrochemicals has no effect on the direction of Zahraa Maadi i.e., Zahraa Maadi and Sidi Kerir go up and down completely randomly.

Pair Corralation between Zahraa Maadi and Sidi Kerir

Assuming the 90 days trading horizon Zahraa Maadi is expected to generate 2.61 times less return on investment than Sidi Kerir. But when comparing it to its historical volatility, Zahraa Maadi Investment is 1.2 times less risky than Sidi Kerir. It trades about 0.08 of its potential returns per unit of risk. Sidi Kerir Petrochemicals is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,792  in Sidi Kerir Petrochemicals on December 29, 2024 and sell it today you would earn a total of  361.00  from holding Sidi Kerir Petrochemicals or generate 20.15% return on investment over 90 days.

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

Zahraa Maadi Investment  vs.  Sidi Kerir Petrochemicals

Zahraa Maadi Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zahraa Maadi Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Zahraa Maadi may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sidi Kerir Petrochemicals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sidi Kerir Petrochemicals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Sidi Kerir reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zahraa Maadi and Sidi Kerir

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

The idea behind Zahraa Maadi Investment and Sidi Kerir Petrochemicals 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.