Correlation Between Misr Chemical and Edita Food
Can any of the company-specific risk be diversified away by investing in both Misr Chemical and Edita Food 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 Chemical and Edita Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Misr Chemical Industries and Edita Food Industries, you can compare the effects of market volatilities on Misr Chemical and Edita Food 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 Chemical with a short position of Edita Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr Chemical and Edita Food.
Diversification Opportunities for Misr Chemical and Edita Food
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Misr and Edita is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Misr Chemical Industries and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries and Misr Chemical 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 Chemical Industries are associated (or correlated) with Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of Misr Chemical i.e., Misr Chemical and Edita Food go up and down completely randomly.
Pair Corralation between Misr Chemical and Edita Food
Assuming the 90 days trading horizon Misr Chemical is expected to generate 1.07 times less return on investment than Edita Food. In addition to that, Misr Chemical is 1.73 times more volatile than Edita Food Industries. It trades about 0.04 of its total potential returns per unit of risk. Edita Food Industries is currently generating about 0.08 per unit of volatility. If you would invest 1,747 in Edita Food Industries on August 31, 2024 and sell it today you would earn a total of 1,099 from holding Edita Food Industries or generate 62.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Misr Chemical Industries vs. Edita Food Industries
Performance |
| Timeline |
| Misr Chemical Industries |
| Edita Food Industries |
Misr Chemical and Edita Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Misr Chemical and Edita Food
The main advantage of trading using opposite Misr Chemical and Edita Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr Chemical position performs unexpectedly, Edita Food 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 Edita Food will offset losses from the drop in Edita Food's long position.| Misr Chemical vs. Paint Chemicals Industries | Misr Chemical vs. Reacap Financial Investments | Misr Chemical vs. Egyptians For Investment | Misr Chemical vs. Misr Oils Soap |
| Edita Food vs. Paint Chemicals Industries | Edita Food vs. Reacap Financial Investments | Edita Food vs. Egyptians For Investment | Edita Food 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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