Correlation Between Misr Hotels and Egypt Aluminum
Can any of the company-specific risk be diversified away by investing in both Misr Hotels and Egypt Aluminum 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 Misr Hotels and Egypt Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Misr Hotels and Egypt Aluminum, you can compare the effects of market volatilities on Misr Hotels and Egypt Aluminum 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 Misr Hotels with a short position of Egypt Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr Hotels and Egypt Aluminum.
Diversification Opportunities for Misr Hotels and Egypt Aluminum
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Misr and Egypt is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Misr Hotels and Egypt Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egypt Aluminum and Misr Hotels 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 Misr Hotels are associated (or correlated) with Egypt Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egypt Aluminum has no effect on the direction of Misr Hotels i.e., Misr Hotels and Egypt Aluminum go up and down completely randomly.
Pair Corralation between Misr Hotels and Egypt Aluminum
Assuming the 90 days trading horizon Misr Hotels is expected to under-perform the Egypt Aluminum. In addition to that, Misr Hotels is 1.22 times more volatile than Egypt Aluminum. It trades about -0.11 of its total potential returns per unit of risk. Egypt Aluminum is currently generating about 0.02 per unit of volatility. If you would invest 11,117 in Egypt Aluminum on September 2, 2024 and sell it today you would earn a total of 38.00 from holding Egypt Aluminum or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Misr Hotels vs. Egypt Aluminum
Performance |
| Timeline |
| Misr Hotels |
| Egypt Aluminum |
Misr Hotels and Egypt Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Misr Hotels and Egypt Aluminum
The main advantage of trading using opposite Misr Hotels and Egypt Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr Hotels position performs unexpectedly, Egypt Aluminum 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 Egypt Aluminum will offset losses from the drop in Egypt Aluminum's long position.| Misr Hotels vs. Egyptians For Investment | Misr Hotels vs. Misr Oils Soap | Misr Hotels vs. Global Telecom Holding | Misr Hotels vs. Qatar Natl Bank |
| Egypt Aluminum vs. Egyptians For Investment | Egypt Aluminum vs. Misr Oils Soap | Egypt Aluminum vs. Global Telecom Holding | Egypt Aluminum vs. Qatar Natl Bank |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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