Correlation Between Misr Oils and Credit Agricole

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

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

Diversification Opportunities for Misr Oils and Credit Agricole

0.48

Correlation Coefficient

Misr Oils  Credit Agricole

Very weak diversification

The 3 months correlation between Misr and Credit is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Misr Oils Soap and Credit Agricole Egypt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Agricole Egypt and Misr Oils 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 Oils Soap are associated (or correlated) with Credit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Agricole Egypt has no effect on the direction of Misr Oils i.e., Misr Oils and Credit Agricole go up and down completely randomly.

Pair Corralation between Misr Oils and Credit Agricole

Assuming the 90 days trading horizon Misr Oils is expected to generate 1.93 times less return on investment than Credit Agricole. In addition to that, Misr Oils is 1.33 times more volatile than Credit Agricole Egypt. It trades about 0.09 of its total potential returns per unit of risk. Credit Agricole Egypt is currently generating about 0.23 per unit of volatility. If you would invest  1,900  in Credit Agricole Egypt on December 28, 2024 and sell it today you would earn a total of  331.00  from holding Credit Agricole Egypt or generate 17.42% return on investment over 90 days.

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

Misr Oils Soap  vs.  Credit Agricole Egypt

Misr Oils Soap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Misr Oils Soap are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Misr Oils may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Credit Agricole Egypt

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Agricole Egypt are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Credit Agricole reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Misr Oils and Credit Agricole

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

The idea behind Misr Oils Soap and Credit Agricole Egypt 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 Transaction History module to view history of all your transactions and understand their impact on performance.