Correlation Between Sidi Kerir and Misr National

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

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

Diversification Opportunities for Sidi Kerir and Misr National

-0.74

Correlation Coefficient

Sidi Kerir  Misr National

Pay attention - limited upside

The 3 months correlation between Sidi and Misr is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sidi Kerir Petrochemicals 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 Sidi Kerir 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 Sidi Kerir Petrochemicals 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 Sidi Kerir i.e., Sidi Kerir and Misr National go up and down completely randomly.

Pair Corralation between Sidi Kerir and Misr National

Assuming the 90 days trading horizon Sidi Kerir Petrochemicals is expected to under-perform the Misr National. But the stock apears to be less risky and, when comparing its historical volatility, Sidi Kerir Petrochemicals is 1.01 times less risky than Misr National. The stock trades about -0.19 of its potential returns per unit of risk. The Misr National Steel is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  453.00  in Misr National Steel on September 18, 2024 and sell it today you would earn a total of  81.00  from holding Misr National Steel or generate 17.88% return on investment over 90 days.

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

Sidi Kerir Petrochemicals  vs.  Misr National Steel

Sidi Kerir Petrochemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sidi Kerir Petrochemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with Sidi Kerir and Misr National

The main advantage of trading using opposite Sidi Kerir and Misr National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sidi Kerir 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 Sidi Kerir Petrochemicals 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.