Correlation Between B Investments and Misr Oils
Can any of the company-specific risk be diversified away by investing in both B Investments 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 B Investments and Misr Oils into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Investments Holding and Misr Oils Soap, you can compare the effects of market volatilities on B Investments 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 B Investments with a short position of Misr Oils. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Investments and Misr Oils.
Diversification Opportunities for B Investments and Misr Oils
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BINV and Misr is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding B Investments Holding 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 B Investments 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 B Investments Holding 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 B Investments i.e., B Investments and Misr Oils go up and down completely randomly.
Pair Corralation between B Investments and Misr Oils
Assuming the 90 days trading horizon B Investments Holding is expected to generate 1.11 times more return on investment than Misr Oils. However, B Investments is 1.11 times more volatile than Misr Oils Soap. It trades about -0.12 of its potential returns per unit of risk. Misr Oils Soap is currently generating about -0.14 per unit of risk. If you would invest 2,484 in B Investments Holding on November 5, 2024 and sell it today you would lose (84.00) from holding B Investments Holding or give up 3.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Investments Holding vs. Misr Oils Soap
Performance |
| Timeline |
| B Investments Holding |
| Misr Oils Soap |
B Investments and Misr Oils Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Investments and Misr Oils
The main advantage of trading using opposite B Investments and Misr Oils positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Investments 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.| B Investments vs. General Silos Storage | B Investments vs. Misr Financial Investments | B Investments vs. Delta Insurance | B Investments vs. Union National Bank |
| Misr Oils vs. Egyptian Transport | Misr Oils vs. Nile City Investment | Misr Oils vs. Telecom Egypt | Misr Oils vs. Orascom Investment Holding |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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