Correlation Between Attock Petroleum and Matco Foods
Can any of the company-specific risk be diversified away by investing in both Attock Petroleum and Matco Foods 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 Attock Petroleum and Matco Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Attock Petroleum and Matco Foods, you can compare the effects of market volatilities on Attock Petroleum and Matco Foods 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 Attock Petroleum with a short position of Matco Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Attock Petroleum and Matco Foods.
Diversification Opportunities for Attock Petroleum and Matco Foods
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Attock and Matco is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Attock Petroleum and Matco Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matco Foods and Attock Petroleum 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 Attock Petroleum are associated (or correlated) with Matco Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matco Foods has no effect on the direction of Attock Petroleum i.e., Attock Petroleum and Matco Foods go up and down completely randomly.
Pair Corralation between Attock Petroleum and Matco Foods
Assuming the 90 days trading horizon Attock Petroleum is expected to generate 0.48 times more return on investment than Matco Foods. However, Attock Petroleum is 2.09 times less risky than Matco Foods. It trades about 0.03 of its potential returns per unit of risk. Matco Foods is currently generating about 0.01 per unit of risk. If you would invest 50,832 in Attock Petroleum on October 21, 2024 and sell it today you would earn a total of 418.00 from holding Attock Petroleum or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Attock Petroleum vs. Matco Foods
Performance |
| Timeline |
| Attock Petroleum |
| Matco Foods |
Attock Petroleum and Matco Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Attock Petroleum and Matco Foods
The main advantage of trading using opposite Attock Petroleum and Matco Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Attock Petroleum position performs unexpectedly, Matco Foods 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 Matco Foods will offset losses from the drop in Matco Foods' long position.| Attock Petroleum vs. Sardar Chemical Industries | Attock Petroleum vs. Adamjee Insurance | Attock Petroleum vs. Pakistan Reinsurance | Attock Petroleum vs. Crescent Star Insurance |
| Matco Foods vs. Masood Textile Mills | Matco Foods vs. Fauji Foods | Matco Foods vs. KSB Pumps | Matco Foods vs. Mari Petroleum |
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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