Correlation Between Industrial Engineering and Misr Oils

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

By analyzing existing cross correlation between Industrial Engineering Projects and Misr Oils Soap, you can compare the effects of market volatilities on Industrial Engineering and Misr Oils 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 Industrial Engineering with a short position of Misr Oils. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Engineering and Misr Oils.

Diversification Opportunities for Industrial Engineering and Misr Oils

-0.59

Correlation Coefficient

Industrial Engineering  Misr Oils

Excellent diversification

The 3 months correlation between Industrial and Misr is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Engineering Project and Misr Oils Soap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Misr Oils Soap and Industrial Engineering 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 Industrial Engineering Projects are associated (or correlated) with Misr Oils. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Misr Oils Soap has no effect on the direction of Industrial Engineering i.e., Industrial Engineering and Misr Oils go up and down completely randomly.

Pair Corralation between Industrial Engineering and Misr Oils

Assuming the 90 days trading horizon Industrial Engineering Projects is expected to generate 3.85 times more return on investment than Misr Oils. However, Industrial Engineering is 3.85 times more volatile than Misr Oils Soap. It trades about 0.17 of its potential returns per unit of risk. Misr Oils Soap is currently generating about -0.15 per unit of risk. If you would invest  26.00  in Industrial Engineering Projects on December 4, 2024 and sell it today you would earn a total of  10.00  from holding Industrial Engineering Projects or generate 38.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.0%
Values	Daily Returns

Industrial Engineering Project  vs.  Misr Oils Soap

Industrial Engineering

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Engineering Projects are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Industrial Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

Misr Oils Soap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Misr Oils Soap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Industrial Engineering and Misr Oils

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

The idea behind Industrial Engineering Projects and Misr Oils Soap 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.