Correlation Between Misr National and Natural Gas

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

Diversification Opportunities for Misr National and Natural Gas

-0.18

Correlation Coefficient

Misr National  Natural Gas

Good diversification

The 3 months correlation between Misr and Natural is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Misr National Steel and Natural Gas Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Gas Mining 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 Natural Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Gas Mining has no effect on the direction of Misr National i.e., Misr National and Natural Gas go up and down completely randomly.

Pair Corralation between Misr National and Natural Gas

Assuming the 90 days trading horizon Misr National Steel is expected to generate 2.57 times more return on investment than Natural Gas. However, Misr National is 2.57 times more volatile than Natural Gas Mining. It trades about 0.29 of its potential returns per unit of risk. Natural Gas Mining is currently generating about 0.03 per unit of risk. If you would invest  508.00  in Misr National Steel on December 28, 2024 and sell it today you would earn a total of  446.00  from holding Misr National Steel or generate 87.8% return on investment over 90 days.

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

Misr National Steel  vs.  Natural Gas Mining

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 22 (%) 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.

Natural Gas Mining

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Natural Gas Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Natural Gas is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Misr National and Natural Gas

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

The idea behind Misr National Steel and Natural Gas Mining 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.