Correlation Between Egyptian Iron and Medical Packaging
Can any of the company-specific risk be diversified away by investing in both Egyptian Iron 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 Iron 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 Iron Steel and Medical Packaging, you can compare the effects of market volatilities on Egyptian Iron 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 Iron with a short position of Medical Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Iron and Medical Packaging.
Diversification Opportunities for Egyptian Iron and Medical Packaging
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Egyptian and Medical is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Iron Steel and Medical Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Packaging and Egyptian Iron 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 Iron Steel 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 Iron i.e., Egyptian Iron and Medical Packaging go up and down completely randomly.
Pair Corralation between Egyptian Iron and Medical Packaging
Assuming the 90 days trading horizon Egyptian Iron Steel is expected to under-perform the Medical Packaging. But the stock apears to be less risky and, when comparing its historical volatility, Egyptian Iron Steel is 1.03 times less risky than Medical Packaging. The stock trades about -0.16 of its potential returns per unit of risk. The Medical Packaging is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 129.00 in Medical Packaging on September 24, 2024 and sell it today you would earn a total of 5.00 from holding Medical Packaging or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egyptian Iron Steel vs. Medical Packaging
Performance |
| Timeline |
| Egyptian Iron Steel |
| Medical Packaging |
Egyptian Iron and Medical Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egyptian Iron and Medical Packaging
The main advantage of trading using opposite Egyptian Iron and Medical Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egyptian Iron 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 Iron vs. Memphis Pharmaceuticals | Egyptian Iron vs. Paint Chemicals Industries | Egyptian Iron vs. Egyptians For Investment | Egyptian Iron vs. Global Telecom Holding |
| Medical Packaging vs. Memphis Pharmaceuticals | Medical Packaging vs. Paint Chemicals Industries | Medical Packaging vs. Egyptians For Investment | Medical Packaging 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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