Correlation Between Misr National and Misr Hotels
Can any of the company-specific risk be diversified away by investing in both Misr National and Misr Hotels 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 Misr Hotels 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 Misr Hotels, you can compare the effects of market volatilities on Misr National and Misr Hotels 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 Misr Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr National and Misr Hotels.
Diversification Opportunities for Misr National and Misr Hotels
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Misr and Misr is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Misr National Steel and Misr Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Misr Hotels 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 Misr Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Misr Hotels has no effect on the direction of Misr National i.e., Misr National and Misr Hotels go up and down completely randomly.
Pair Corralation between Misr National and Misr Hotels
Assuming the 90 days trading horizon Misr National Steel is expected to generate 0.95 times more return on investment than Misr Hotels. However, Misr National Steel is 1.06 times less risky than Misr Hotels. It trades about 0.28 of its potential returns per unit of risk. Misr Hotels is currently generating about 0.06 per unit of risk. If you would invest 521.00 in Misr National Steel on November 4, 2024 and sell it today you would earn a total of 54.00 from holding Misr National Steel or generate 10.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Misr National Steel vs. Misr Hotels
Performance |
| Timeline |
| Misr National Steel |
| Misr Hotels |
Misr National and Misr Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Misr National and Misr Hotels
The main advantage of trading using opposite Misr National and Misr Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr National position performs unexpectedly, Misr Hotels 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 Misr Hotels will offset losses from the drop in Misr Hotels' long position.| Misr National vs. Misr Financial Investments | Misr National vs. Misr Hotels | Misr National vs. Inter Cairo For Aluminum | Misr National vs. Reacap Financial Investments |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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