Correlation Between Misr Oils and Cairo Oils
Can any of the company-specific risk be diversified away by investing in both Misr Oils and Cairo Oils 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 Oils and Cairo Oils into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Misr Oils Soap and Cairo Oils Soap, you can compare the effects of market volatilities on Misr Oils and Cairo Oils 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 Oils with a short position of Cairo Oils. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr Oils and Cairo Oils.
Diversification Opportunities for Misr Oils and Cairo Oils
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Misr and Cairo is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Misr Oils Soap and Cairo Oils Soap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Oils Soap and Misr Oils 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 Oils Soap are associated (or correlated) with Cairo Oils. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Oils Soap has no effect on the direction of Misr Oils i.e., Misr Oils and Cairo Oils go up and down completely randomly.
Pair Corralation between Misr Oils and Cairo Oils
Assuming the 90 days trading horizon Misr Oils is expected to generate 2.42 times less return on investment than Cairo Oils. But when comparing it to its historical volatility, Misr Oils Soap is 2.08 times less risky than Cairo Oils. It trades about 0.14 of its potential returns per unit of risk. Cairo Oils Soap is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 24.00 in Cairo Oils Soap on September 2, 2024 and sell it today you would earn a total of 2.00 from holding Cairo Oils Soap or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Misr Oils Soap vs. Cairo Oils Soap
Performance |
| Timeline |
| Misr Oils Soap |
| Cairo Oils Soap |
Misr Oils and Cairo Oils Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Misr Oils and Cairo Oils
The main advantage of trading using opposite Misr Oils and Cairo Oils positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr Oils position performs unexpectedly, Cairo Oils 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 Cairo Oils will offset losses from the drop in Cairo Oils' long position.| Misr Oils vs. Egyptians For Investment | Misr Oils vs. Global Telecom Holding | Misr Oils vs. Qatar Natl Bank | Misr Oils vs. Orascom Construction PLC |
| Cairo Oils vs. Egyptians For Investment | Cairo Oils vs. Misr Oils Soap | Cairo Oils vs. Global Telecom Holding | Cairo Oils 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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