Correlation Between Orascom Construction and Misr National
Can any of the company-specific risk be diversified away by investing in both Orascom Construction and Misr National 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 Orascom Construction and Misr National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orascom Construction PLC and Misr National Steel, you can compare the effects of market volatilities on Orascom Construction and Misr National 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 Orascom Construction with a short position of Misr National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orascom Construction and Misr National.
Diversification Opportunities for Orascom Construction and Misr National
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Orascom and Misr is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Orascom Construction PLC and Misr National Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Misr National Steel and Orascom Construction 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 Orascom Construction PLC are associated (or correlated) with Misr National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Misr National Steel has no effect on the direction of Orascom Construction i.e., Orascom Construction and Misr National go up and down completely randomly.
Pair Corralation between Orascom Construction and Misr National
Assuming the 90 days trading horizon Orascom Construction is expected to generate 2.08 times less return on investment than Misr National. But when comparing it to its historical volatility, Orascom Construction PLC is 1.56 times less risky than Misr National. It trades about 0.08 of its potential returns per unit of risk. Misr National Steel is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 191.00 in Misr National Steel on September 24, 2024 and sell it today you would earn a total of 335.00 from holding Misr National Steel or generate 175.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orascom Construction PLC vs. Misr National Steel
Performance |
| Timeline |
| Orascom Construction PLC |
| Misr National Steel |
Orascom Construction and Misr National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orascom Construction and Misr National
The main advantage of trading using opposite Orascom Construction and Misr National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orascom Construction position performs unexpectedly, Misr National 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 Misr National will offset losses from the drop in Misr National's long position.| Orascom Construction vs. Memphis Pharmaceuticals | Orascom Construction vs. Paint Chemicals Industries | Orascom Construction vs. Egyptians For Investment | Orascom Construction vs. Global Telecom Holding |
| Misr National vs. Memphis Pharmaceuticals | Misr National vs. Paint Chemicals Industries | Misr National vs. Egyptians For Investment | Misr National vs. Global Telecom Holding |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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