Correlation Between Bank Alfalah and Mari Petroleum
Can any of the company-specific risk be diversified away by investing in both Bank Alfalah 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 Bank Alfalah and Mari Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Alfalah and Mari Petroleum, you can compare the effects of market volatilities on Bank Alfalah 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 Bank Alfalah with a short position of Mari Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Alfalah and Mari Petroleum.
Diversification Opportunities for Bank Alfalah and Mari Petroleum
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Mari is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Alfalah and Mari Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mari Petroleum and Bank Alfalah 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 Bank Alfalah 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 Bank Alfalah i.e., Bank Alfalah and Mari Petroleum go up and down completely randomly.
Pair Corralation between Bank Alfalah and Mari Petroleum
Assuming the 90 days trading horizon Bank Alfalah is expected to generate 2.13 times less return on investment than Mari Petroleum. But when comparing it to its historical volatility, Bank Alfalah is 2.42 times less risky than Mari Petroleum. It trades about 0.15 of its potential returns per unit of risk. Mari Petroleum is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,398 in Mari Petroleum on August 27, 2024 and sell it today you would earn a total of 41,266 from holding Mari Petroleum or generate 938.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Alfalah vs. Mari Petroleum
Performance |
| Timeline |
| Bank Alfalah |
| Mari Petroleum |
Bank Alfalah and Mari Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Alfalah and Mari Petroleum
The main advantage of trading using opposite Bank Alfalah and Mari Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Alfalah 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.| Bank Alfalah vs. National Bank of | Bank Alfalah vs. Meezan Bank | Bank Alfalah vs. Bank Al Habib | Bank Alfalah vs. Habib Metropolitan Bank |
| Mari Petroleum vs. JS Global Banking | Mari Petroleum vs. Century Insurance | Mari Petroleum vs. Jubilee Life Insurance | Mari Petroleum vs. Unity Foods |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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