Correlation Between Extracted Oils and Misr Oils

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

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

Diversification Opportunities for Extracted Oils and Misr Oils

0.46

Correlation Coefficient

Extracted Oils  Misr Oils

Very weak diversification

The 3 months correlation between Extracted and Misr is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Extracted Oils 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 Extracted 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 Extracted Oils 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 Extracted Oils i.e., Extracted Oils and Misr Oils go up and down completely randomly.

Pair Corralation between Extracted Oils and Misr Oils

Assuming the 90 days trading horizon Extracted Oils is expected to generate 3.55 times less return on investment than Misr Oils. But when comparing it to its historical volatility, Extracted Oils is 1.52 times less risky than Misr Oils. It trades about 0.07 of its potential returns per unit of risk. Misr Oils Soap is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  6,027  in Misr Oils Soap on April 22, 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Extracted Oils  vs.  Misr Oils Soap

Extracted Oils

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Extracted Oils are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Extracted Oils may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 Extracted Oils and Misr Oils

The main advantage of trading using opposite Extracted Oils and Misr Oils positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extracted Oils 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 Extracted Oils 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.

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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.