Correlation Between Misr National and Mohandes Insurance

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

Diversification Opportunities for Misr National and Mohandes Insurance

0.82

Correlation Coefficient

Misr National  Mohandes Insurance

Very poor diversification

The 3 months correlation between Misr and Mohandes is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Misr National Steel and Mohandes Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mohandes Insurance 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 Mohandes Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mohandes Insurance has no effect on the direction of Misr National i.e., Misr National and Mohandes Insurance go up and down completely randomly.

Pair Corralation between Misr National and Mohandes Insurance

Assuming the 90 days trading horizon Misr National is expected to generate 3.19 times less return on investment than Mohandes Insurance. But when comparing it to its historical volatility, Misr National Steel is 1.75 times less risky than Mohandes Insurance. It trades about 0.16 of its potential returns per unit of risk. Mohandes Insurance is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  2,156  in Mohandes Insurance on September 17, 2024 and sell it today you would earn a total of  357.00  from holding Mohandes Insurance or generate 16.56% 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.  Mohandes Insurance

Misr National Steel

Risk-Adjusted Performance

9 of 100

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.

Mohandes Insurance

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mohandes Insurance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Mohandes Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Misr National and Mohandes Insurance

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

The idea behind Misr National Steel and Mohandes Insurance 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.