Correlation Between Egyptians For and Misr Hotels

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

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

Diversification Opportunities for Egyptians For and Misr Hotels

-0.58

Correlation Coefficient

Egyptians For  Misr Hotels

Excellent diversification

The 3 months correlation between Egyptians and Misr is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Egyptians For Investment and Misr Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Misr Hotels and Egyptians For 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 Egyptians For Investment are associated (or correlated) with Misr Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Misr Hotels has no effect on the direction of Egyptians For i.e., Egyptians For and Misr Hotels go up and down completely randomly.

Pair Corralation between Egyptians For and Misr Hotels

Assuming the 90 days trading horizon Egyptians For Investment is expected to generate 1.62 times more return on investment than Misr Hotels. However, Egyptians For is 1.62 times more volatile than Misr Hotels. It trades about 0.12 of its potential returns per unit of risk. Misr Hotels is currently generating about -0.02 per unit of risk. If you would invest  24.00  in Egyptians For Investment on December 5, 2024 and sell it today you would earn a total of  5.00  from holding Egyptians For Investment or generate 20.83% return on investment over 90 days.

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

Egyptians For Investment  vs.  Misr Hotels

Egyptians For Investment

Risk-Adjusted Performance

OK

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

Misr Hotels

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Egyptians For and Misr Hotels

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

The idea behind Egyptians For Investment and Misr Hotels 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.