Correlation Between Medical Packaging and Egyptian Chemical
Can any of the company-specific risk be diversified away by investing in both Medical Packaging and Egyptian 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 Medical Packaging and Egyptian Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Packaging and Egyptian Chemical Industries, you can compare the effects of market volatilities on Medical Packaging and Egyptian 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 Medical Packaging with a short position of Egyptian Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Packaging and Egyptian Chemical.
Diversification Opportunities for Medical Packaging and Egyptian Chemical
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Medical and Egyptian is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Medical Packaging and Egyptian Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Chemical and Medical Packaging 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 Medical Packaging are associated (or correlated) with Egyptian Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Chemical has no effect on the direction of Medical Packaging i.e., Medical Packaging and Egyptian Chemical go up and down completely randomly.
Pair Corralation between Medical Packaging and Egyptian Chemical
Assuming the 90 days trading horizon Medical Packaging is expected to generate 1.93 times more return on investment than Egyptian Chemical. However, Medical Packaging is 1.93 times more volatile than Egyptian Chemical Industries. It trades about 0.13 of its potential returns per unit of risk. Egyptian Chemical Industries is currently generating about -0.26 per unit of risk. 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 |
Medical Packaging vs. Egyptian Chemical Industries
Performance |
| Timeline |
| Medical Packaging |
| Egyptian Chemical |
Medical Packaging and Egyptian Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Packaging and Egyptian Chemical
The main advantage of trading using opposite Medical Packaging and Egyptian Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Packaging position performs unexpectedly, Egyptian 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 Egyptian Chemical will offset losses from the drop in Egyptian Chemical's long position.| Medical Packaging vs. Paint Chemicals Industries | Medical Packaging vs. Reacap Financial Investments | Medical Packaging vs. Egyptians For Investment | Medical Packaging vs. Misr Oils Soap |
| Egyptian Chemical vs. Paint Chemicals Industries | Egyptian Chemical vs. Reacap Financial Investments | Egyptian Chemical vs. Egyptians For Investment | Egyptian Chemical 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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