Correlation Between Misr Hotels and Iron

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

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

Diversification Opportunities for Misr Hotels and Iron

-0.3

Correlation Coefficient

Misr Hotels  Iron

Very good diversification

The 3 months correlation between Misr and Iron is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Misr Hotels and Iron And Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron And Steel and Misr Hotels 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 Hotels are associated (or correlated) with Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron And Steel has no effect on the direction of Misr Hotels i.e., Misr Hotels and Iron go up and down completely randomly.

Pair Corralation between Misr Hotels and Iron

Assuming the 90 days trading horizon Misr Hotels is expected to generate 1.39 times less return on investment than Iron. In addition to that, Misr Hotels is 1.78 times more volatile than Iron And Steel. It trades about 0.03 of its total potential returns per unit of risk. Iron And Steel is currently generating about 0.08 per unit of volatility. If you would invest  122.00  in Iron And Steel on September 28, 2024 and sell it today you would earn a total of  275.00  from holding Iron And Steel or generate 225.41% return on investment over 90 days.

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

Misr Hotels  vs.  Iron And Steel

Misr Hotels

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Misr Hotels are ranked lower than 6 (%) 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.

Iron And Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron And Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Misr Hotels and Iron

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

The idea behind Misr Hotels and Iron And 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.