Correlation Between Misr Oils and Ismailia Development
Can any of the company-specific risk be diversified away by investing in both Misr Oils and Ismailia Development 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 Ismailia Development 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 Ismailia Development and, you can compare the effects of market volatilities on Misr Oils and Ismailia Development 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 Ismailia Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr Oils and Ismailia Development.
Diversification Opportunities for Misr Oils and Ismailia Development
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Misr and Ismailia is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Misr Oils Soap and Ismailia Development and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ismailia Development and 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 Ismailia Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ismailia Development and has no effect on the direction of Misr Oils i.e., Misr Oils and Ismailia Development go up and down completely randomly.
Pair Corralation between Misr Oils and Ismailia Development
Assuming the 90 days trading horizon Misr Oils Soap is expected to generate 0.79 times more return on investment than Ismailia Development. However, Misr Oils Soap is 1.27 times less risky than Ismailia Development. It trades about 0.02 of its potential returns per unit of risk. Ismailia Development and is currently generating about -0.02 per unit of risk. If you would invest 6,000 in Misr Oils Soap on September 12, 2024 and sell it today you would earn a total of 14.00 from holding Misr Oils Soap or generate 0.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Misr Oils Soap vs. Ismailia Development and
Performance |
| Timeline |
| Misr Oils Soap |
| Ismailia Development and |
Misr Oils and Ismailia Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Misr Oils and Ismailia Development
The main advantage of trading using opposite Misr Oils and Ismailia Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr Oils position performs unexpectedly, Ismailia Development 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 Ismailia Development will offset losses from the drop in Ismailia Development's long position.| Misr Oils vs. Paint Chemicals Industries | Misr Oils vs. Reacap Financial Investments | Misr Oils vs. Egyptians For Investment | Misr Oils vs. Ismailia Development and |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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