Correlation Between Misr National and Misr Oils
Can any of the company-specific risk be diversified away by investing in both Misr National and Misr Oils 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 Oils 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 Oils Soap, you can compare the effects of market volatilities on Misr National and Misr Oils 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 Oils. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr National and Misr Oils.
Diversification Opportunities for Misr National and Misr Oils
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Misr and Misr is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Misr National Steel and Misr Oils Soap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Misr Oils Soap 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 Oils. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Misr Oils Soap has no effect on the direction of Misr National i.e., Misr National and Misr Oils go up and down completely randomly.
Pair Corralation between Misr National and Misr Oils
Assuming the 90 days trading horizon Misr National is expected to generate 1.57 times less return on investment than Misr Oils. In addition to that, Misr National is 1.49 times more volatile than Misr Oils Soap. It trades about 0.06 of its total potential returns per unit of risk. Misr Oils Soap is currently generating about 0.14 per unit of volatility. If you would invest 6,000 in Misr Oils Soap on September 1, 2024 and sell it today you would earn a total of 210.00 from holding Misr Oils Soap or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Misr National Steel vs. Misr Oils Soap
Performance |
| Timeline |
| Misr National Steel |
| Misr Oils Soap |
Misr National and Misr Oils Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Misr National and Misr Oils
The main advantage of trading using opposite Misr National and Misr Oils positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr National position performs unexpectedly, Misr Oils 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 Oils will offset losses from the drop in Misr Oils' long position.| Misr National vs. Paint Chemicals Industries | Misr National vs. Egyptians For Investment | Misr National vs. Misr Oils Soap | Misr National vs. Global Telecom Holding |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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