Correlation Between Askari General and MCB Bank
Can any of the company-specific risk be diversified away by investing in both Askari General and MCB 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 Askari General and MCB Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Askari General Insurance and MCB Bank, you can compare the effects of market volatilities on Askari General and MCB 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 Askari General with a short position of MCB Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari General and MCB Bank.
Diversification Opportunities for Askari General and MCB Bank
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Askari and MCB is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Askari General Insurance and MCB Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB Bank and Askari General 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 Askari General Insurance are associated (or correlated) with MCB Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB Bank has no effect on the direction of Askari General i.e., Askari General and MCB Bank go up and down completely randomly.
Pair Corralation between Askari General and MCB Bank
Assuming the 90 days trading horizon Askari General Insurance is expected to generate 2.38 times more return on investment than MCB Bank. However, Askari General is 2.38 times more volatile than MCB Bank. It trades about 0.17 of its potential returns per unit of risk. MCB Bank is currently generating about -0.15 per unit of risk. If you would invest 2,848 in Askari General Insurance on October 31, 2024 and sell it today you would earn a total of 219.00 from holding Askari General Insurance or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Askari General Insurance vs. MCB Bank
Performance |
| Timeline |
| Askari General Insurance |
| MCB Bank |
Askari General and MCB Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Askari General and MCB Bank
The main advantage of trading using opposite Askari General and MCB Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari General position performs unexpectedly, MCB 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 MCB Bank will offset losses from the drop in MCB Bank's long position.| Askari General vs. Soneri Bank | Askari General vs. Fauji Foods | Askari General vs. Pakistan Reinsurance | Askari General vs. Bank of Punjab |
| MCB Bank vs. East West Insurance | MCB Bank vs. Engro Polymer Chemicals | MCB Bank vs. Adamjee Insurance | MCB Bank vs. JS Bank |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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