Correlation Between Misr Oils and Juhayna Food

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

Diversification Opportunities for Misr Oils and Juhayna Food

-0.51

Correlation Coefficient

Misr Oils  Juhayna Food

Excellent diversification

The 3 months correlation between Misr and Juhayna is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Misr Oils Soap and Juhayna Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juhayna Food Industries 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 Juhayna Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juhayna Food Industries has no effect on the direction of Misr Oils i.e., Misr Oils and Juhayna Food go up and down completely randomly.

Pair Corralation between Misr Oils and Juhayna Food

Assuming the 90 days trading horizon Misr Oils Soap is expected to under-perform the Juhayna Food. But the stock apears to be less risky and, when comparing its historical volatility, Misr Oils Soap is 2.55 times less risky than Juhayna Food. The stock trades about -0.01 of its potential returns per unit of risk. The Juhayna Food Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,072  in Juhayna Food Industries on December 25, 2024 and sell it today you would earn a total of  174.00  from holding Juhayna Food Industries or generate 5.66% return on investment over 90 days.

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

Misr Oils Soap  vs.  Juhayna Food Industries

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 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.

Juhayna Food Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Juhayna Food Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Juhayna Food may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Misr Oils and Juhayna Food

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

The idea behind Misr Oils Soap and Juhayna Food Industries 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.