Correlation Between Telecom Egypt and Misr Chemical

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

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

Diversification Opportunities for Telecom Egypt and Misr Chemical

0.33

Correlation Coefficient

Telecom Egypt  Misr Chemical

Weak diversification

The 3 months correlation between Telecom and Misr is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Egypt 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 Telecom Egypt 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 Telecom Egypt 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 Telecom Egypt i.e., Telecom Egypt and Misr Chemical go up and down completely randomly.

Pair Corralation between Telecom Egypt and Misr Chemical

Assuming the 90 days trading horizon Telecom Egypt is expected to generate 1.29 times more return on investment than Misr Chemical. However, Telecom Egypt is 1.29 times more volatile than Misr Chemical Industries. It trades about 0.1 of its potential returns per unit of risk. Misr Chemical Industries is currently generating about 0.09 per unit of risk. If you would invest  3,460  in Telecom Egypt on April 24, 2025 and sell it today you would earn a total of  301.00  from holding Telecom Egypt or generate 8.7% return on investment over 90 days.

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

Telecom Egypt  vs.  Misr Chemical Industries

Telecom Egypt

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Egypt are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Telecom Egypt reported solid returns over the last few months and may actually be approaching a breakup point.

Misr Chemical Industries

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Misr Chemical Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Misr Chemical may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Telecom Egypt and Misr Chemical

The main advantage of trading using opposite Telecom Egypt and Misr Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Egypt 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 Telecom Egypt 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.