Correlation Between Misr Oils and Egyptian Media
Can any of the company-specific risk be diversified away by investing in both Misr Oils and Egyptian Media 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 Media 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 Media Production, you can compare the effects of market volatilities on Misr Oils and Egyptian Media 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 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr Oils and Egyptian Media.
Diversification Opportunities for Misr Oils and Egyptian Media
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Misr and Egyptian is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Misr Oils Soap and Egyptian Media Production in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Media Production 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 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Media Production has no effect on the direction of Misr Oils i.e., Misr Oils and Egyptian Media go up and down completely randomly.
Pair Corralation between Misr Oils and Egyptian Media
Assuming the 90 days trading horizon Misr Oils is expected to generate 1.57 times less return on investment than Egyptian Media. But when comparing it to its historical volatility, Misr Oils Soap is 1.71 times less risky than Egyptian Media. It trades about 0.09 of its potential returns per unit of risk. Egyptian Media Production is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 791.00 in Egyptian Media Production on September 2, 2024 and sell it today you would earn a total of 1,679 from holding Egyptian Media Production or generate 212.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Misr Oils Soap vs. Egyptian Media Production
Performance |
| Timeline |
| Misr Oils Soap |
| Egyptian Media Production |
Misr Oils and Egyptian Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Misr Oils and Egyptian Media
The main advantage of trading using opposite Misr Oils and Egyptian Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr Oils position performs unexpectedly, Egyptian Media 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 Media will offset losses from the drop in Egyptian Media's long position.| Misr Oils vs. Egyptians For Investment | Misr Oils vs. Qatar Natl Bank | Misr Oils vs. Orascom Construction PLC | Misr Oils vs. Orascom Investment Holding |
| Egyptian Media vs. Egyptians For Investment | Egyptian Media vs. Misr Oils Soap | Egyptian Media vs. Qatar Natl Bank | Egyptian Media vs. Orascom Construction PLC |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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