Correlation Between Misr Oils and Gadwa For

Can any of the company-specific risk be diversified away by investing in both Misr Oils and Gadwa For 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 Gadwa For 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 Gadwa For Industrial, you can compare the effects of market volatilities on Misr Oils and Gadwa For 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 Gadwa For. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr Oils and Gadwa For.

Diversification Opportunities for Misr Oils and Gadwa For

0.41

Correlation Coefficient

Misr Oils  Gadwa For

Very weak diversification

The 3 months correlation between Misr and Gadwa is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Misr Oils Soap and Gadwa For Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gadwa For Industrial 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 Gadwa For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gadwa For Industrial has no effect on the direction of Misr Oils i.e., Misr Oils and Gadwa For go up and down completely randomly.

Pair Corralation between Misr Oils and Gadwa For

Assuming the 90 days trading horizon Misr Oils Soap is expected to generate 0.74 times more return on investment than Gadwa For. However, Misr Oils Soap is 1.34 times less risky than Gadwa For. It trades about -0.03 of its potential returns per unit of risk. Gadwa For Industrial is currently generating about -0.37 per unit of risk. If you would invest  6,000  in Misr Oils Soap on October 9, 2024 and sell it today you would lose (104.00) from holding Misr Oils Soap or give up 1.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.97%
Values	Daily Returns

Misr Oils Soap  vs.  Gadwa For Industrial

Misr Oils Soap

Risk-Adjusted Performance

0 of 100

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 nearly stable technical and fundamental indicators, Misr Oils is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Gadwa For Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gadwa For Industrial 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Misr Oils and Gadwa For

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

The idea behind Misr Oils Soap and Gadwa For Industrial 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.