Correlation Between Misr Hotels and Misr Chemical
Can any of the company-specific risk be diversified away by investing in both Misr Hotels 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 Misr Hotels and Misr Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Misr Hotels and Misr Chemical Industries, you can compare the effects of market volatilities on Misr Hotels 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 Misr Hotels with a short position of Misr Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr Hotels and Misr Chemical.
Diversification Opportunities for Misr Hotels and Misr Chemical
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Misr and Misr is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Misr Hotels 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 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 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 Misr Hotels i.e., Misr Hotels and Misr Chemical go up and down completely randomly.
Pair Corralation between Misr Hotels and Misr Chemical
Assuming the 90 days trading horizon Misr Hotels is expected to generate 0.61 times more return on investment than Misr Chemical. However, Misr Hotels is 1.64 times less risky than Misr Chemical. It trades about -0.11 of its potential returns per unit of risk. Misr Chemical Industries is currently generating about -0.29 per unit of risk. If you would invest 3,125 in Misr Hotels on September 2, 2024 and sell it today you would lose (141.00) from holding Misr Hotels or give up 4.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Misr Hotels vs. Misr Chemical Industries
Performance |
| Timeline |
| Misr Hotels |
| Misr Chemical Industries |
Misr Hotels and Misr Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Misr Hotels and Misr Chemical
The main advantage of trading using opposite Misr Hotels and Misr Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr Hotels 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.| Misr Hotels vs. Egyptians For Investment | Misr Hotels vs. Misr Oils Soap | Misr Hotels vs. Global Telecom Holding | Misr Hotels vs. Qatar Natl Bank |
| Misr Chemical vs. Egyptians For Investment | Misr Chemical vs. Misr Oils Soap | Misr Chemical vs. Global Telecom Holding | Misr Chemical 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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