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
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Adamjee and Mari is 0.43. 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 2.22 times less return on investment than Mari Petroleum. But when comparing it to its historical volatility, Adamjee Insurance is 1.01 times less risky than Mari Petroleum. It trades about 0.08 of its potential returns per unit of risk. Mari Petroleum is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 41,902 in Mari Petroleum on August 30, 2024 and sell it today you would earn a total of 3,892 from holding Mari Petroleum or generate 9.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| 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. Masood Textile Mills | Adamjee Insurance vs. Fauji Foods | Adamjee Insurance vs. KSB Pumps | Adamjee Insurance vs. Mari Petroleum |
| Mari Petroleum vs. Habib Bank | Mari Petroleum vs. National Bank of | Mari Petroleum vs. United Bank | Mari Petroleum vs. MCB 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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