Correlation Between Adamjee Insurance and Mari Petroleum
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Mari Petroleum 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 Adamjee Insurance and Mari Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Mari Petroleum, you can compare the effects of market volatilities on Adamjee Insurance and Mari Petroleum 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 Adamjee Insurance with a short position of Mari Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Mari Petroleum.
Diversification Opportunities for Adamjee Insurance and Mari Petroleum
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Adamjee and Mari is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Mari Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mari Petroleum and Adamjee Insurance 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 Adamjee Insurance are associated (or correlated) with Mari Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mari Petroleum has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Mari Petroleum go up and down completely randomly.
Pair Corralation between Adamjee Insurance and Mari Petroleum
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 0.69 times more return on investment than Mari Petroleum. However, Adamjee Insurance is 1.45 times less risky than Mari Petroleum. It trades about 0.0 of its potential returns per unit of risk. Mari Petroleum is currently generating about -0.19 per unit of risk. If you would invest 4,861 in Adamjee Insurance on November 3, 2024 and sell it today you would lose (51.00) from holding Adamjee Insurance or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adamjee Insurance vs. Mari Petroleum
Performance |
| Timeline |
| Adamjee Insurance |
| Mari Petroleum |
Adamjee Insurance and Mari Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and Mari Petroleum
The main advantage of trading using opposite Adamjee Insurance and Mari Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Mari Petroleum 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 Mari Petroleum will offset losses from the drop in Mari Petroleum's long position.| Adamjee Insurance vs. Pakistan Tobacco | Adamjee Insurance vs. Pakistan Aluminium Beverage | Adamjee Insurance vs. Ittehad Chemicals | Adamjee Insurance vs. Murree Brewery |
| Mari Petroleum vs. WorldCall Telecom | Mari Petroleum vs. IGI Life Insurance | Mari Petroleum vs. Air Link Communication | Mari Petroleum vs. Pakistan Telecommunication |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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