Correlation Between Bestway Cement and Meezan Bank
Can any of the company-specific risk be diversified away by investing in both Bestway Cement and Meezan Bank 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 Bestway Cement and Meezan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bestway Cement and Meezan Bank, you can compare the effects of market volatilities on Bestway Cement and Meezan Bank 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 Bestway Cement with a short position of Meezan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bestway Cement and Meezan Bank.
Diversification Opportunities for Bestway Cement and Meezan Bank
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bestway and Meezan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bestway Cement and Meezan Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meezan Bank and Bestway Cement 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 Bestway Cement are associated (or correlated) with Meezan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meezan Bank has no effect on the direction of Bestway Cement i.e., Bestway Cement and Meezan Bank go up and down completely randomly.
Pair Corralation between Bestway Cement and Meezan Bank
Assuming the 90 days trading horizon Bestway Cement is expected to generate 0.42 times more return on investment than Meezan Bank. However, Bestway Cement is 2.4 times less risky than Meezan Bank. It trades about 0.36 of its potential returns per unit of risk. Meezan Bank is currently generating about -0.01 per unit of risk. If you would invest 29,161 in Bestway Cement on September 1, 2024 and sell it today you would earn a total of 3,312 from holding Bestway Cement or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bestway Cement vs. Meezan Bank
Performance |
| Timeline |
| Bestway Cement |
| Meezan Bank |
Bestway Cement and Meezan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bestway Cement and Meezan Bank
The main advantage of trading using opposite Bestway Cement and Meezan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bestway Cement position performs unexpectedly, Meezan Bank 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 Meezan Bank will offset losses from the drop in Meezan Bank's long position.| Bestway Cement vs. National Bank of | Bestway Cement vs. Shaheen Insurance | Bestway Cement vs. Pakistan Telecommunication | Bestway Cement vs. Habib Insurance |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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