Correlation Between Egyptian Chemical and Medical Packaging
Can any of the company-specific risk be diversified away by investing in both Egyptian Chemical and Medical Packaging 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 Egyptian Chemical and Medical Packaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Egyptian Chemical Industries and Medical Packaging, you can compare the effects of market volatilities on Egyptian Chemical and Medical Packaging 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 Egyptian Chemical with a short position of Medical Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Chemical and Medical Packaging.
Diversification Opportunities for Egyptian Chemical and Medical Packaging
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Egyptian and Medical is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Chemical Industries and Medical Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Packaging and Egyptian Chemical 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 Egyptian Chemical Industries are associated (or correlated) with Medical Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Packaging has no effect on the direction of Egyptian Chemical i.e., Egyptian Chemical and Medical Packaging go up and down completely randomly.
Pair Corralation between Egyptian Chemical and Medical Packaging
Assuming the 90 days trading horizon Egyptian Chemical Industries is expected to under-perform the Medical Packaging. But the stock apears to be less risky and, when comparing its historical volatility, Egyptian Chemical Industries is 1.93 times less risky than Medical Packaging. The stock trades about -0.26 of its potential returns per unit of risk. The Medical Packaging is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 134.00 in Medical Packaging on September 19, 2024 and sell it today you would earn a total of 7.00 from holding Medical Packaging or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egyptian Chemical Industries vs. Medical Packaging
Performance |
| Timeline |
| Egyptian Chemical |
| Medical Packaging |
Egyptian Chemical and Medical Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egyptian Chemical and Medical Packaging
The main advantage of trading using opposite Egyptian Chemical and Medical Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egyptian Chemical position performs unexpectedly, Medical Packaging 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 Medical Packaging will offset losses from the drop in Medical Packaging's long position.| Egyptian Chemical vs. Paint Chemicals Industries | Egyptian Chemical vs. Reacap Financial Investments | Egyptian Chemical vs. Egyptians For Investment | Egyptian Chemical vs. Misr Oils Soap |
| Medical Packaging vs. Paint Chemicals Industries | Medical Packaging vs. Reacap Financial Investments | Medical Packaging vs. Egyptians For Investment | Medical Packaging vs. Misr Oils Soap |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Global Correlations Find global opportunities by holding instruments from different markets |