Correlation Between Qatar Natl and Misr Chemical

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

By analyzing existing cross correlation between Qatar Natl Bank and Misr Chemical Industries, you can compare the effects of market volatilities on Qatar Natl and Misr Chemical 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 Qatar Natl with a short position of Misr Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qatar Natl and Misr Chemical.

Diversification Opportunities for Qatar Natl and Misr Chemical

-0.29

Correlation Coefficient

Qatar Natl  Misr Chemical

Very good diversification

The 3 months correlation between Qatar and Misr is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Qatar Natl Bank and Misr Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Misr Chemical Industries and Qatar Natl 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 Qatar Natl Bank are associated (or correlated) with Misr Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Misr Chemical Industries has no effect on the direction of Qatar Natl i.e., Qatar Natl and Misr Chemical go up and down completely randomly.

Pair Corralation between Qatar Natl and Misr Chemical

Assuming the 90 days trading horizon Qatar Natl Bank is expected to generate 0.54 times more return on investment than Misr Chemical. However, Qatar Natl Bank is 1.84 times less risky than Misr Chemical. It trades about -0.1 of its potential returns per unit of risk. Misr Chemical Industries is currently generating about -0.08 per unit of risk. If you would invest  3,252  in Qatar Natl Bank on December 21, 2024 and sell it today you would lose (180.00) from holding Qatar Natl Bank or give up 5.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.04%
Values	Daily Returns

Qatar Natl Bank  vs.  Misr Chemical Industries

Qatar Natl Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qatar Natl Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Misr Chemical Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Misr Chemical Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Qatar Natl and Misr Chemical

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

The idea behind Qatar Natl Bank and Misr Chemical 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 Stocks Directory module to find actively traded stocks across global markets.