Correlation Between El Nasr and Misr National

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

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

Diversification Opportunities for El Nasr and Misr National

0.6

Correlation Coefficient

El Nasr  Misr National

Poor diversification

The 3 months correlation between KABO and Misr is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding El Nasr Clothes 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 El Nasr 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 El Nasr Clothes 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 El Nasr i.e., El Nasr and Misr National go up and down completely randomly.

Pair Corralation between El Nasr and Misr National

Assuming the 90 days trading horizon El Nasr Clothes is expected to generate 1.22 times more return on investment than Misr National. However, El Nasr is 1.22 times more volatile than Misr National Steel. It trades about 0.25 of its potential returns per unit of risk. Misr National Steel is currently generating about 0.12 per unit of risk. If you would invest  257.00  in El Nasr Clothes on September 17, 2024 and sell it today you would earn a total of  134.00  from holding El Nasr Clothes or generate 52.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.11%
Values	Daily Returns

El Nasr Clothes  vs.  Misr National Steel

El Nasr Clothes

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in El Nasr Clothes are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, El Nasr reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with El Nasr and Misr National

The main advantage of trading using opposite El Nasr and Misr National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Nasr 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.

The idea behind El Nasr Clothes and Misr National 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.