Correlation Between Medical Packaging and Misr National

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

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

Diversification Opportunities for Medical Packaging and Misr National

-0.43

Correlation Coefficient

Medical Packaging  Misr National

Very good diversification

The 3 months correlation between Medical and Misr is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Medical Packaging and Misr National Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Misr National Steel and Medical Packaging 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 Medical Packaging are associated (or correlated) with Misr National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Misr National Steel has no effect on the direction of Medical Packaging i.e., Medical Packaging and Misr National go up and down completely randomly.

Pair Corralation between Medical Packaging and Misr National

Assuming the 90 days trading horizon Medical Packaging is expected to under-perform the Misr National. But the stock apears to be less risky and, when comparing its historical volatility, Medical Packaging is 1.42 times less risky than Misr National. The stock trades about -0.04 of its potential returns per unit of risk. The Misr National Steel is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  539.00  in Misr National Steel on December 4, 2024 and sell it today you would earn a total of  112.00  from holding Misr National Steel or generate 20.78% return on investment over 90 days.

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

Medical Packaging  vs.  Misr National Steel

Medical Packaging

Risk-Adjusted Performance

Very Weak

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

Misr National Steel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Misr National Steel are ranked lower than 11 (%) 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.

Pair Trading with Medical Packaging and Misr National

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

The idea behind Medical Packaging and Misr National Steel 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.