Correlation Between Misr Oils and Zahraa Maadi

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

Diversification Opportunities for Misr Oils and Zahraa Maadi

0.33

Correlation Coefficient

Misr Oils  Zahraa Maadi

Weak diversification

The 3 months correlation between Misr and Zahraa is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Misr Oils Soap and Zahraa Maadi Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zahraa Maadi Investment 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 Zahraa Maadi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zahraa Maadi Investment has no effect on the direction of Misr Oils i.e., Misr Oils and Zahraa Maadi go up and down completely randomly.

Pair Corralation between Misr Oils and Zahraa Maadi

Assuming the 90 days trading horizon Misr Oils Soap is expected to generate 1.06 times more return on investment than Zahraa Maadi. However, Misr Oils is 1.06 times more volatile than Zahraa Maadi Investment. It trades about 0.09 of its potential returns per unit of risk. Zahraa Maadi Investment is currently generating about 0.08 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Misr Oils Soap  vs.  Zahraa Maadi Investment

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.

Zahraa Maadi Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zahraa Maadi Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Zahraa Maadi may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Misr Oils and Zahraa Maadi

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

The idea behind Misr Oils Soap and Zahraa Maadi Investment 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.