Correlation Between Fawry For and Misr Hotels

Can any of the company-specific risk be diversified away by investing in both Fawry 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 Fawry 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 Fawry For Banking and Misr Hotels, you can compare the effects of market volatilities on Fawry 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 Fawry For with a short position of Misr Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fawry For and Misr Hotels.

Diversification Opportunities for Fawry For and Misr Hotels

0.05

Correlation Coefficient

Fawry For  Misr Hotels

Significant diversification

The 3 months correlation between Fawry and Misr is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fawry For Banking and Misr Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Misr Hotels and Fawry 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 Fawry For Banking 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 Fawry For i.e., Fawry For and Misr Hotels go up and down completely randomly.

Pair Corralation between Fawry For and Misr Hotels

Assuming the 90 days trading horizon Fawry For Banking is expected to generate 1.03 times more return on investment than Misr Hotels. However, Fawry For is 1.03 times more volatile than Misr Hotels. It trades about -0.11 of its potential returns per unit of risk. Misr Hotels is currently generating about -0.2 per unit of risk. If you would invest  869.00  in Fawry For Banking on October 16, 2024 and sell it today you would lose (34.00) from holding Fawry For Banking or give up 3.91% of portfolio value over 90 days.

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

Fawry For Banking  vs.  Misr Hotels

Fawry For Banking

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fawry For Banking are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Fawry For may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Misr Hotels

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Fawry For and Misr Hotels

The main advantage of trading using opposite Fawry For and Misr Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fawry 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 Fawry For Banking 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.

Check out your portfolio center.

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 Stocks Directory module to find actively traded stocks across global markets.