Correlation Between Misr National and Iron

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Can any of the company-specific risk be diversified away by investing in both Misr National and 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 National and Iron 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 Iron And Steel, you can compare the effects of market volatilities on Misr National and 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 National with a short position of Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr National and Iron.

Diversification Opportunities for Misr National and Iron

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Misr and Iron is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Misr National Steel and Iron And Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron And Steel 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 Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron And Steel has no effect on the direction of Misr National i.e., Misr National and Iron go up and down completely randomly.

Pair Corralation between Misr National and Iron

Assuming the 90 days trading horizon Misr National Steel is expected to generate 0.96 times more return on investment than Iron. However, Misr National Steel is 1.04 times less risky than Iron. It trades about 0.16 of its potential returns per unit of risk. Iron And Steel is currently generating about -0.08 per unit of risk. If you would invest  509.00  in Misr National Steel on September 17, 2024 and sell it today you would earn a total of  25.00  from holding Misr National Steel or generate 4.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Misr National Steel  vs.  Iron And Steel

 Performance 
       Timeline  
Misr National Steel 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Misr National Steel are ranked lower than 9 (%) 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.
Iron And Steel 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Iron And Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Misr National and Iron Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Misr National and Iron

The main advantage of trading using opposite Misr National and Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr National position performs unexpectedly, 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 Iron will offset losses from the drop in Iron's long position.
The idea behind Misr National Steel and Iron And Steel 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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