Correlation Between Century Insurance and Murree Brewery
Can any of the company-specific risk be diversified away by investing in both Century Insurance and Murree Brewery 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 Murree Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Insurance and Murree Brewery, you can compare the effects of market volatilities on Century Insurance and Murree Brewery 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 Murree Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Insurance and Murree Brewery.
Diversification Opportunities for Century Insurance and Murree Brewery
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Century and Murree is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Century Insurance and Murree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murree Brewery 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 Murree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murree Brewery has no effect on the direction of Century Insurance i.e., Century Insurance and Murree Brewery go up and down completely randomly.
Pair Corralation between Century Insurance and Murree Brewery
Assuming the 90 days trading horizon Century Insurance is expected to generate 1.54 times more return on investment than Murree Brewery. However, Century Insurance is 1.54 times more volatile than Murree Brewery. It trades about 0.38 of its potential returns per unit of risk. Murree Brewery is currently generating about 0.35 per unit of risk. If you would invest 3,090 in Century Insurance on August 28, 2024 and sell it today you would earn a total of 630.00 from holding Century Insurance or generate 20.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Insurance vs. Murree Brewery
Performance |
| Timeline |
| Century Insurance |
| Murree Brewery |
Century Insurance and Murree Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Insurance and Murree Brewery
The main advantage of trading using opposite Century Insurance and Murree Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Insurance position performs unexpectedly, Murree Brewery 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 Murree Brewery will offset losses from the drop in Murree Brewery's long position.| Century Insurance vs. Habib Bank | Century Insurance vs. National Bank of | Century Insurance vs. United Bank | Century Insurance vs. MCB Bank |
| Murree Brewery vs. Habib Insurance | Murree Brewery vs. Century Insurance | Murree Brewery vs. Reliance Weaving Mills | Murree Brewery vs. Media Times |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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