Correlation Between Misr Financial and Arab Aluminum

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

By analyzing existing cross correlation between Misr Financial Investments and Arab Aluminum, you can compare the effects of market volatilities on Misr Financial and Arab Aluminum 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 Financial with a short position of Arab Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr Financial and Arab Aluminum.

Diversification Opportunities for Misr Financial and Arab Aluminum

0.0

Correlation Coefficient

Misr Financial  Arab Aluminum

Pay attention - limited upside

The 3 months correlation between Misr and Arab is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Misr Financial Investments and Arab Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arab Aluminum and Misr Financial 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 Financial Investments are associated (or correlated) with Arab Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arab Aluminum has no effect on the direction of Misr Financial i.e., Misr Financial and Arab Aluminum go up and down completely randomly.

Pair Corralation between Misr Financial and Arab Aluminum

If you would invest  1,162  in Arab Aluminum on September 15, 2024 and sell it today you would earn a total of  312.00  from holding Arab Aluminum or generate 26.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Misr Financial Investments  vs.  Arab Aluminum

Misr Financial Inves

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Misr Financial Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Misr Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Arab Aluminum

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arab Aluminum are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Arab Aluminum reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Misr Financial and Arab Aluminum

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

The idea behind Misr Financial Investments and Arab Aluminum 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.