Correlation Between Misr National and Misr Chemical
Can any of the company-specific risk be diversified away by investing in both Misr National and Misr Chemical 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 Chemical 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 Chemical Industries, you can compare the effects of market volatilities on Misr National and Misr Chemical 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 Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr National and Misr Chemical.
Diversification Opportunities for Misr National and Misr Chemical
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Misr and Misr is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Misr National Steel and Misr Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Misr Chemical Industries 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 Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Misr Chemical Industries has no effect on the direction of Misr National i.e., Misr National and Misr Chemical go up and down completely randomly.
Pair Corralation between Misr National and Misr Chemical
Assuming the 90 days trading horizon Misr National Steel is expected to generate 1.08 times more return on investment than Misr Chemical. However, Misr National is 1.08 times more volatile than Misr Chemical Industries. It trades about 0.1 of its potential returns per unit of risk. Misr Chemical Industries is currently generating about 0.02 per unit of risk. If you would invest 143.00 in Misr National Steel on November 19, 2024 and sell it today you would earn a total of 384.00 from holding Misr National Steel or generate 268.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Misr National Steel vs. Misr Chemical Industries
Performance |
| Timeline |
| Misr National Steel |
| Misr Chemical Industries |
Misr National and Misr Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Misr National and Misr Chemical
The main advantage of trading using opposite Misr National and Misr Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr National position performs unexpectedly, Misr Chemical 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 Chemical will offset losses from the drop in Misr Chemical'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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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