Correlation Between Adamjee Insurance and MCB Investment
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and MCB Investment 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 MCB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and MCB Investment Manag, you can compare the effects of market volatilities on Adamjee Insurance and MCB Investment 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 MCB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and MCB Investment.
Diversification Opportunities for Adamjee Insurance and MCB Investment
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Adamjee and MCB is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and MCB Investment Manag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB Investment Manag 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 MCB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB Investment Manag has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and MCB Investment go up and down completely randomly.
Pair Corralation between Adamjee Insurance and MCB Investment
Assuming the 90 days trading horizon Adamjee Insurance is expected to under-perform the MCB Investment. But the stock apears to be less risky and, when comparing its historical volatility, Adamjee Insurance is 2.09 times less risky than MCB Investment. The stock trades about -0.3 of its potential returns per unit of risk. The MCB Investment Manag is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 7,011 in MCB Investment Manag on November 6, 2024 and sell it today you would earn a total of 38.00 from holding MCB Investment Manag or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adamjee Insurance vs. MCB Investment Manag
Performance |
| Timeline |
| Adamjee Insurance |
| MCB Investment Manag |
Adamjee Insurance and MCB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and MCB Investment
The main advantage of trading using opposite Adamjee Insurance and MCB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, MCB Investment 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 Investment will offset losses from the drop in MCB Investment's long position.| Adamjee Insurance vs. Masood Textile Mills | Adamjee Insurance vs. Fauji Foods | Adamjee Insurance vs. KSB Pumps | Adamjee Insurance vs. Mari Petroleum |
| MCB Investment vs. Pakistan Tobacco | MCB Investment vs. Invest Capital Investment | MCB Investment vs. Hi Tech Lubricants | MCB Investment vs. Pakistan Aluminium Beverage |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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