Correlation Between Misr Oils and Orascom Construction

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

Diversification Opportunities for Misr Oils and Orascom Construction

0.71

Correlation Coefficient

Misr Oils  Orascom Construction

Poor diversification

The 3 months correlation between Misr and Orascom is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Misr Oils Soap and Orascom Construction PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orascom Construction PLC 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 Orascom Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orascom Construction PLC has no effect on the direction of Misr Oils i.e., Misr Oils and Orascom Construction go up and down completely randomly.

Pair Corralation between Misr Oils and Orascom Construction

Assuming the 90 days trading horizon Misr Oils Soap is expected to generate 1.22 times more return on investment than Orascom Construction. However, Misr Oils is 1.22 times more volatile than Orascom Construction PLC. It trades about 0.09 of its potential returns per unit of risk. Orascom Construction PLC is currently generating about 0.05 per unit of risk. If you would invest  5,896  in Misr Oils Soap on December 30, 2024 and sell it today you would earn a total of  475.00  from holding Misr Oils Soap or generate 8.06% return on investment over 90 days.

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

Misr Oils Soap  vs.  Orascom Construction PLC

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.

Orascom Construction PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Orascom Construction PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Orascom Construction is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Misr Oils and Orascom Construction

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

The idea behind Misr Oils Soap and Orascom Construction PLC 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.