Correlation Between Misr National and Qatar Natl

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

Diversification Opportunities for Misr National and Qatar Natl

0.71

Correlation Coefficient

Misr National  Qatar Natl

Poor diversification

The 3 months correlation between Misr and Qatar is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Misr National Steel and Qatar Natl Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qatar Natl Bank 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 Qatar Natl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qatar Natl Bank has no effect on the direction of Misr National i.e., Misr National and Qatar Natl go up and down completely randomly.

Pair Corralation between Misr National and Qatar Natl

Assuming the 90 days trading horizon Misr National Steel is expected to under-perform the Qatar Natl. But the stock apears to be less risky and, when comparing its historical volatility, Misr National Steel is 1.24 times less risky than Qatar Natl. The stock trades about -0.26 of its potential returns per unit of risk. The Qatar Natl Bank is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  3,452  in Qatar Natl Bank on October 9, 2024 and sell it today you would lose (162.00) from holding Qatar Natl Bank or give up 4.69% of portfolio value over 90 days.

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

Misr National Steel  vs.  Qatar Natl Bank

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.

Qatar Natl Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qatar Natl Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Qatar Natl may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Misr National and Qatar Natl

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

The idea behind Misr National Steel and Qatar Natl Bank 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.