Correlation Between Al Tawfeek and Misr Oils

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

By analyzing existing cross correlation between Al Tawfeek Leasing and Misr Oils Soap, you can compare the effects of market volatilities on Al Tawfeek and Misr Oils 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 Al Tawfeek with a short position of Misr Oils. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Tawfeek and Misr Oils.

Diversification Opportunities for Al Tawfeek and Misr Oils

-0.24

Correlation Coefficient

Al Tawfeek  Misr Oils

Very good diversification

The 3 months correlation between ATLC and Misr is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Al Tawfeek Leasing and Misr Oils Soap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Misr Oils Soap and Al Tawfeek 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 Al Tawfeek Leasing are associated (or correlated) with Misr Oils. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Misr Oils Soap has no effect on the direction of Al Tawfeek i.e., Al Tawfeek and Misr Oils go up and down completely randomly.

Pair Corralation between Al Tawfeek and Misr Oils

Assuming the 90 days trading horizon Al Tawfeek Leasing is expected to under-perform the Misr Oils. In addition to that, Al Tawfeek is 1.17 times more volatile than Misr Oils Soap. It trades about -0.02 of its total potential returns per unit of risk. Misr Oils Soap is currently generating about 0.18 per unit of volatility. If you would invest  6,027  in Misr Oils Soap on April 23, 2025 and sell it today you would earn a total of  1,916  from holding Misr Oils Soap or generate 31.79% return on investment over 90 days.

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

Al Tawfeek Leasing  vs.  Misr Oils Soap

Al Tawfeek Leasing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Al Tawfeek Leasing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Al Tawfeek is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Misr Oils Soap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Misr Oils Soap are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Misr Oils reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Al Tawfeek and Misr Oils

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

The idea behind Al Tawfeek Leasing and Misr Oils Soap 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.