Correlation Between Misr Oils and Egyptian Iron
Can any of the company-specific risk be diversified away by investing in both Misr Oils and Egyptian Iron 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 Egyptian Iron 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 Egyptian Iron Steel, you can compare the effects of market volatilities on Misr Oils and Egyptian Iron 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 Egyptian Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr Oils and Egyptian Iron.
Diversification Opportunities for Misr Oils and Egyptian Iron
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Misr and Egyptian is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Misr Oils Soap and Egyptian Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Iron Steel 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 Egyptian Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Iron Steel has no effect on the direction of Misr Oils i.e., Misr Oils and Egyptian Iron go up and down completely randomly.
Pair Corralation between Misr Oils and Egyptian Iron
Assuming the 90 days trading horizon Misr Oils is expected to generate 4.39 times less return on investment than Egyptian Iron. But when comparing it to its historical volatility, Misr Oils Soap is 2.51 times less risky than Egyptian Iron. It trades about 0.08 of its potential returns per unit of risk. Egyptian Iron Steel is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,042 in Egyptian Iron Steel on August 30, 2024 and sell it today you would earn a total of 1,117 from holding Egyptian Iron Steel or generate 27.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Misr Oils Soap vs. Egyptian Iron Steel
Performance |
| Timeline |
| Misr Oils Soap |
| Egyptian Iron Steel |
Misr Oils and Egyptian Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Misr Oils and Egyptian Iron
The main advantage of trading using opposite Misr Oils and Egyptian Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr Oils position performs unexpectedly, Egyptian Iron 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 Egyptian Iron will offset losses from the drop in Egyptian Iron's long position.| Misr Oils vs. Atlas For Investment | Misr Oils vs. Saudi Egyptian Investment | Misr Oils vs. El Ahli Investment | Misr Oils vs. Iron And Steel |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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