Correlation Between Century Insurance and Masood Textile
Can any of the company-specific risk be diversified away by investing in both Century Insurance and Masood Textile 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 Century Insurance and Masood Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Insurance and Masood Textile Mills, you can compare the effects of market volatilities on Century Insurance and Masood Textile 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 Century Insurance with a short position of Masood Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Insurance and Masood Textile.
Diversification Opportunities for Century Insurance and Masood Textile
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Century and Masood is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Century Insurance and Masood Textile Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masood Textile Mills and Century 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 Century Insurance are associated (or correlated) with Masood Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masood Textile Mills has no effect on the direction of Century Insurance i.e., Century Insurance and Masood Textile go up and down completely randomly.
Pair Corralation between Century Insurance and Masood Textile
Assuming the 90 days trading horizon Century Insurance is expected to generate 0.82 times more return on investment than Masood Textile. However, Century Insurance is 1.23 times less risky than Masood Textile. It trades about 0.12 of its potential returns per unit of risk. Masood Textile Mills is currently generating about 0.05 per unit of risk. If you would invest 1,179 in Century Insurance on November 5, 2024 and sell it today you would earn a total of 2,741 from holding Century Insurance or generate 232.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 78.76% |
| Values | Daily Returns |
Century Insurance vs. Masood Textile Mills
Performance |
| Timeline |
| Century Insurance |
| Masood Textile Mills |
Century Insurance and Masood Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Insurance and Masood Textile
The main advantage of trading using opposite Century Insurance and Masood Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Insurance position performs unexpectedly, Masood Textile 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 Masood Textile will offset losses from the drop in Masood Textile's long position.| Century Insurance vs. Roshan Packages | Century Insurance vs. Packages | Century Insurance vs. JS Investments | Century Insurance vs. Nimir Industrial Chemical |
| Masood Textile vs. Invest Capital Investment | Masood Textile vs. Pakistan Reinsurance | Masood Textile vs. Shaheen Insurance | Masood Textile vs. JS 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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