Correlation Between Egypt Aluminum and Misr National
Can any of the company-specific risk be diversified away by investing in both Egypt Aluminum and Misr National 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 Egypt Aluminum and Misr National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Egypt Aluminum and Misr National Steel, you can compare the effects of market volatilities on Egypt Aluminum and Misr National 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 Egypt Aluminum with a short position of Misr National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egypt Aluminum and Misr National.
Diversification Opportunities for Egypt Aluminum and Misr National
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Egypt and Misr is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Egypt Aluminum and Misr National Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Misr National Steel and Egypt Aluminum 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 Egypt Aluminum are associated (or correlated) with Misr National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Misr National Steel has no effect on the direction of Egypt Aluminum i.e., Egypt Aluminum and Misr National go up and down completely randomly.
Pair Corralation between Egypt Aluminum and Misr National
Assuming the 90 days trading horizon Egypt Aluminum is expected to generate 0.88 times more return on investment than Misr National. However, Egypt Aluminum is 1.13 times less risky than Misr National. It trades about 0.11 of its potential returns per unit of risk. Misr National Steel is currently generating about 0.1 per unit of risk. If you would invest 3,464 in Egypt Aluminum on November 19, 2024 and sell it today you would earn a total of 10,831 from holding Egypt Aluminum or generate 312.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egypt Aluminum vs. Misr National Steel
Performance |
| Timeline |
| Egypt Aluminum |
| Misr National Steel |
Egypt Aluminum and Misr National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egypt Aluminum and Misr National
The main advantage of trading using opposite Egypt Aluminum and Misr National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egypt Aluminum position performs unexpectedly, Misr National 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 National will offset losses from the drop in Misr National's long position.| Egypt Aluminum vs. Arabia Investments Holding | Egypt Aluminum vs. Assiut Islamic Trading | Egypt Aluminum vs. Cairo For Investment | Egypt Aluminum vs. Natural Gas Mining |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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