Correlation Between Misr National and Orascom Construction
Can any of the company-specific risk be diversified away by investing in both Misr National and Orascom Construction 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 Orascom Construction 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 Orascom Construction PLC, you can compare the effects of market volatilities on Misr National and Orascom Construction 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 Orascom Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr National and Orascom Construction.
Diversification Opportunities for Misr National and Orascom Construction
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Misr and Orascom is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Misr National Steel and Orascom Construction PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orascom Construction PLC 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 Orascom Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orascom Construction PLC has no effect on the direction of Misr National i.e., Misr National and Orascom Construction go up and down completely randomly.
Pair Corralation between Misr National and Orascom Construction
Assuming the 90 days trading horizon Misr National Steel is expected to generate 1.42 times more return on investment than Orascom Construction. However, Misr National is 1.42 times more volatile than Orascom Construction PLC. It trades about 0.1 of its potential returns per unit of risk. Orascom Construction PLC is currently generating about 0.11 per unit of risk. If you would invest 120.00 in Misr National Steel on September 2, 2024 and sell it today you would earn a total of 405.00 from holding Misr National Steel or generate 337.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Misr National Steel vs. Orascom Construction PLC
Performance |
| Timeline |
| Misr National Steel |
| Orascom Construction PLC |
Misr National and Orascom Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Misr National and Orascom Construction
The main advantage of trading using opposite Misr National and Orascom Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr National position performs unexpectedly, Orascom Construction 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 Orascom Construction will offset losses from the drop in Orascom Construction's long position.| Misr National vs. Egyptians For Investment | Misr National vs. Misr Oils Soap | Misr National vs. Global Telecom Holding | Misr National vs. Qatar Natl Bank |
| Orascom Construction vs. Egyptians For Investment | Orascom Construction vs. Misr Oils Soap | Orascom Construction vs. Global Telecom Holding | Orascom Construction vs. Qatar Natl Bank |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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