Correlation Between Egyptians For and Misr Chemical
Can any of the company-specific risk be diversified away by investing in both Egyptians For and Misr Chemical 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 Egyptians For and Misr Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Egyptians For Investment and Misr Chemical Industries, you can compare the effects of market volatilities on Egyptians For and Misr Chemical 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 Egyptians For with a short position of Misr Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptians For and Misr Chemical.
Diversification Opportunities for Egyptians For and Misr Chemical
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Egyptians and Misr is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Egyptians For Investment and Misr Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Misr Chemical Industries and Egyptians For 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 Egyptians For Investment are associated (or correlated) with Misr Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Misr Chemical Industries has no effect on the direction of Egyptians For i.e., Egyptians For and Misr Chemical go up and down completely randomly.
Pair Corralation between Egyptians For and Misr Chemical
Assuming the 90 days trading horizon Egyptians For Investment is expected to generate 12.12 times more return on investment than Misr Chemical. However, Egyptians For is 12.12 times more volatile than Misr Chemical Industries. It trades about 0.04 of its potential returns per unit of risk. Misr Chemical Industries is currently generating about 0.05 per unit of risk. If you would invest 1,175 in Egyptians For Investment on August 30, 2024 and sell it today you would lose (1,150) from holding Egyptians For Investment or give up 97.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egyptians For Investment vs. Misr Chemical Industries
Performance |
| Timeline |
| Egyptians For Investment |
| Misr Chemical Industries |
Egyptians For and Misr Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egyptians For and Misr Chemical
The main advantage of trading using opposite Egyptians For and Misr Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egyptians For position performs unexpectedly, Misr Chemical 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 Chemical will offset losses from the drop in Misr Chemical's long position.| Egyptians For vs. Paint Chemicals Industries | Egyptians For vs. Misr Oils Soap | Egyptians For vs. Global Telecom Holding | Egyptians For vs. Qatar Natl Bank |
| Misr Chemical vs. Paint Chemicals Industries | Misr Chemical vs. Egyptians For Investment | Misr Chemical vs. Misr Oils Soap | Misr Chemical vs. Global Telecom 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 CEOs Directory module to screen CEOs from public companies around the world.
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