Correlation Between Misr National and Egypt Aluminum
Can any of the company-specific risk be diversified away by investing in both Misr National and Egypt Aluminum 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 Egypt Aluminum 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 Egypt Aluminum, you can compare the effects of market volatilities on Misr National and Egypt Aluminum 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 Egypt Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr National and Egypt Aluminum.
Diversification Opportunities for Misr National and Egypt Aluminum
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Misr and Egypt is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Misr National Steel and Egypt Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egypt Aluminum 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 Egypt Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egypt Aluminum has no effect on the direction of Misr National i.e., Misr National and Egypt Aluminum go up and down completely randomly.
Pair Corralation between Misr National and Egypt Aluminum
Assuming the 90 days trading horizon Misr National is expected to generate 1.03 times less return on investment than Egypt Aluminum. In addition to that, Misr National is 1.13 times more volatile than Egypt Aluminum. It trades about 0.1 of its total potential returns per unit of risk. Egypt Aluminum is currently generating about 0.11 per unit of volatility. If you would invest 3,464 in Egypt Aluminum on November 19, 2024 and sell it today you would earn a total of 10,831 from holding Egypt Aluminum or generate 312.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Misr National Steel vs. Egypt Aluminum
Performance |
| Timeline |
| Misr National Steel |
| Egypt Aluminum |
Misr National and Egypt Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Misr National and Egypt Aluminum
The main advantage of trading using opposite Misr National and Egypt Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr National position performs unexpectedly, Egypt Aluminum 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 Egypt Aluminum will offset losses from the drop in Egypt Aluminum's long position.| Misr National vs. Misr Financial Investments | Misr National vs. Reacap Financial Investments | Misr National vs. Al Khair River | Misr National vs. Medical Packaging |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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