Correlation Between Misr National and Al Tawfeek
Can any of the company-specific risk be diversified away by investing in both Misr National and Al Tawfeek 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 Misr National and Al Tawfeek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Misr National Steel and Al Tawfeek Leasing, you can compare the effects of market volatilities on Misr National and Al Tawfeek 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 Misr National with a short position of Al Tawfeek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr National and Al Tawfeek.
Diversification Opportunities for Misr National and Al Tawfeek
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Misr and ATLC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Misr National Steel and Al Tawfeek Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Tawfeek Leasing and Misr National 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 Misr National Steel are associated (or correlated) with Al Tawfeek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Tawfeek Leasing has no effect on the direction of Misr National i.e., Misr National and Al Tawfeek go up and down completely randomly.
Pair Corralation between Misr National and Al Tawfeek
Assuming the 90 days trading horizon Misr National Steel is expected to generate 1.95 times more return on investment than Al Tawfeek. However, Misr National is 1.95 times more volatile than Al Tawfeek Leasing. It trades about 0.09 of its potential returns per unit of risk. Al Tawfeek Leasing is currently generating about 0.0 per unit of risk. If you would invest 254.00 in Misr National Steel on September 24, 2024 and sell it today you would earn a total of 272.00 from holding Misr National Steel or generate 107.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Misr National Steel vs. Al Tawfeek Leasing
Performance |
| Timeline |
| Misr National Steel |
| Al Tawfeek Leasing |
Misr National and Al Tawfeek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Misr National and Al Tawfeek
The main advantage of trading using opposite Misr National and Al Tawfeek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr National position performs unexpectedly, Al Tawfeek 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 Al Tawfeek will offset losses from the drop in Al Tawfeek's long position.| Misr National vs. Memphis Pharmaceuticals | Misr National vs. Paint Chemicals Industries | Misr National vs. Egyptians For Investment | Misr National vs. Global Telecom Holding |
| Al Tawfeek vs. Memphis Pharmaceuticals | Al Tawfeek vs. Paint Chemicals Industries | Al Tawfeek vs. Egyptians For Investment | Al Tawfeek vs. Global Telecom Holding |
Check out your portfolio center.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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