Correlation Between 786 Investment and Meezan Bank
Can any of the company-specific risk be diversified away by investing in both 786 Investment and Meezan Bank 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 786 Investment and Meezan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 786 Investment Limited and Meezan Bank, you can compare the effects of market volatilities on 786 Investment and Meezan Bank 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 786 Investment with a short position of Meezan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of 786 Investment and Meezan Bank.
Diversification Opportunities for 786 Investment and Meezan Bank
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 786 and Meezan is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding 786 Investment Limited and Meezan Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meezan Bank and 786 Investment 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 786 Investment Limited are associated (or correlated) with Meezan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meezan Bank has no effect on the direction of 786 Investment i.e., 786 Investment and Meezan Bank go up and down completely randomly.
Pair Corralation between 786 Investment and Meezan Bank
Assuming the 90 days trading horizon 786 Investment Limited is expected to generate 2.61 times more return on investment than Meezan Bank. However, 786 Investment is 2.61 times more volatile than Meezan Bank. It trades about 0.05 of its potential returns per unit of risk. Meezan Bank is currently generating about 0.13 per unit of risk. If you would invest 445.00 in 786 Investment Limited on September 12, 2024 and sell it today you would earn a total of 277.00 from holding 786 Investment Limited or generate 62.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 73.35% |
| Values | Daily Returns |
786 Investment Limited vs. Meezan Bank
Performance |
| Timeline |
| 786 Investment |
| Meezan Bank |
786 Investment and Meezan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 786 Investment and Meezan Bank
The main advantage of trading using opposite 786 Investment and Meezan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 786 Investment position performs unexpectedly, Meezan Bank 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 Meezan Bank will offset losses from the drop in Meezan Bank's long position.| 786 Investment vs. Habib Insurance | 786 Investment vs. Ghandhara Automobile | 786 Investment vs. Century Insurance | 786 Investment vs. Reliance Weaving Mills |
| Meezan Bank vs. Adamjee Insurance | Meezan Bank vs. NetSol Technologies | Meezan Bank vs. 786 Investment Limited | Meezan Bank vs. Engro Polymer Chemicals |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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