Correlation Between Misr National and Egyptians For

Can any of the company-specific risk be diversified away by investing in both Misr National and Egyptians For 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 National and Egyptians For into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Misr National Steel and Egyptians For Investment, you can compare the effects of market volatilities on Misr National and Egyptians For 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 National with a short position of Egyptians For. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr National and Egyptians For.

Diversification Opportunities for Misr National and Egyptians For

0.85

Correlation Coefficient

Misr National  Egyptians For

Very poor diversification

The 3 months correlation between Misr and Egyptians is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Misr National Steel and Egyptians For Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptians For Investment and Misr National 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 National Steel are associated (or correlated) with Egyptians For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptians For Investment has no effect on the direction of Misr National i.e., Misr National and Egyptians For go up and down completely randomly.

Pair Corralation between Misr National and Egyptians For

Assuming the 90 days trading horizon Misr National is expected to generate 1.32 times less return on investment than Egyptians For. But when comparing it to its historical volatility, Misr National Steel is 1.01 times less risky than Egyptians For. It trades about 0.13 of its potential returns per unit of risk. Egyptians For Investment is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Egyptians For Investment on September 18, 2024 and sell it today you would earn a total of  5.00  from holding Egyptians For Investment or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Misr National Steel  vs.  Egyptians For Investment

Misr National Steel

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Misr National Steel are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Misr National reported solid returns over the last few months and may actually be approaching a breakup point.

Egyptians For Investment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Egyptians For Investment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Egyptians For reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Misr National and Egyptians For

The main advantage of trading using opposite Misr National and Egyptians For positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr National position performs unexpectedly, Egyptians For 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 Egyptians For will offset losses from the drop in Egyptians For's long position.

The idea behind Misr National Steel and Egyptians For Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.