Correlation Between Natural Gas and Misr Hotels
Can any of the company-specific risk be diversified away by investing in both Natural Gas and Misr Hotels 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 Natural Gas and Misr Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Gas Mining and Misr Hotels, you can compare the effects of market volatilities on Natural Gas and Misr Hotels 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 Natural Gas with a short position of Misr Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Gas and Misr Hotels.
Diversification Opportunities for Natural Gas and Misr Hotels
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Natural and Misr is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Natural Gas Mining and Misr Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Misr Hotels and Natural Gas 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 Natural Gas Mining are associated (or correlated) with Misr Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Misr Hotels has no effect on the direction of Natural Gas i.e., Natural Gas and Misr Hotels go up and down completely randomly.
Pair Corralation between Natural Gas and Misr Hotels
Assuming the 90 days trading horizon Natural Gas Mining is expected to under-perform the Misr Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Natural Gas Mining is 1.43 times less risky than Misr Hotels. The stock trades about -0.03 of its potential returns per unit of risk. The Misr Hotels is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,873 in Misr Hotels on November 4, 2024 and sell it today you would earn a total of 51.00 from holding Misr Hotels or generate 1.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Gas Mining vs. Misr Hotels
Performance |
| Timeline |
| Natural Gas Mining |
| Misr Hotels |
Natural Gas and Misr Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Gas and Misr Hotels
The main advantage of trading using opposite Natural Gas and Misr Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Gas position performs unexpectedly, Misr Hotels 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 Hotels will offset losses from the drop in Misr Hotels' long position.| Natural Gas vs. Odin for Investment | Natural Gas vs. Egypt Aluminum | Natural Gas vs. Nile City Investment | Natural Gas vs. Cairo For Investment |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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