Correlation Between Al Tawfeek and Misr National

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

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

Diversification Opportunities for Al Tawfeek and Misr National

0.37

Correlation Coefficient

Al Tawfeek  Misr National

Weak diversification

The 3 months correlation between ATLC and Misr is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Al Tawfeek Leasing 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 Al Tawfeek 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 Al Tawfeek Leasing 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 Al Tawfeek i.e., Al Tawfeek and Misr National go up and down completely randomly.

Pair Corralation between Al Tawfeek and Misr National

Assuming the 90 days trading horizon Al Tawfeek is expected to generate 2.08 times less return on investment than Misr National. But when comparing it to its historical volatility, Al Tawfeek Leasing is 1.92 times less risky than Misr National. It trades about 0.24 of its potential returns per unit of risk. Misr National Steel is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  508.00  in Misr National Steel on December 27, 2024 and sell it today you would earn a total of  377.00  from holding Misr National Steel or generate 74.21% return on investment over 90 days.

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

Al Tawfeek Leasing  vs.  Misr National Steel

Al Tawfeek Leasing

Risk-Adjusted Performance

Solid

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

Misr National Steel

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Misr National Steel are ranked lower than 20 (%) 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 Al Tawfeek and Misr National

The main advantage of trading using opposite Al Tawfeek and Misr National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Tawfeek 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 Al Tawfeek Leasing 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 Global Correlations module to find global opportunities by holding instruments from different markets.