Correlation Between Data Agro and Meezan Bank
Can any of the company-specific risk be diversified away by investing in both Data Agro 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 Data Agro and Meezan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Data Agro and Meezan Bank, you can compare the effects of market volatilities on Data Agro 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 Data Agro with a short position of Meezan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data Agro and Meezan Bank.
Diversification Opportunities for Data Agro and Meezan Bank
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Data and Meezan is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Data Agro and Meezan Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meezan Bank and Data Agro 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 Data Agro 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 Data Agro i.e., Data Agro and Meezan Bank go up and down completely randomly.
Pair Corralation between Data Agro and Meezan Bank
Assuming the 90 days trading horizon Data Agro is expected to generate 3.63 times more return on investment than Meezan Bank. However, Data Agro is 3.63 times more volatile than Meezan Bank. It trades about 0.15 of its potential returns per unit of risk. Meezan Bank is currently generating about 0.17 per unit of risk. If you would invest 1,457 in Data Agro on August 25, 2024 and sell it today you would earn a total of 6,539 from holding Data Agro or generate 448.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.89% |
| Values | Daily Returns |
Data Agro vs. Meezan Bank
Performance |
| Timeline |
| Data Agro |
| Meezan Bank |
Data Agro and Meezan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Data Agro and Meezan Bank
The main advantage of trading using opposite Data Agro and Meezan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data Agro 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.| Data Agro vs. Masood Textile Mills | Data Agro vs. Fauji Foods | Data Agro vs. KSB Pumps | Data Agro vs. Mari Petroleum |
| Meezan Bank vs. ORIX Leasing Pakistan | Meezan Bank vs. National Bank of | Meezan Bank vs. Orient Rental Modaraba | Meezan Bank vs. Data Agro |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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