Correlation Between Ghani Chemical and MCB Investment
Can any of the company-specific risk be diversified away by investing in both Ghani Chemical and MCB Investment 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 Ghani Chemical and MCB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ghani Chemical Industries and MCB Investment Manag, you can compare the effects of market volatilities on Ghani Chemical and MCB Investment 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 Ghani Chemical with a short position of MCB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghani Chemical and MCB Investment.
Diversification Opportunities for Ghani Chemical and MCB Investment
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ghani and MCB is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ghani Chemical Industries and MCB Investment Manag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB Investment Manag and Ghani Chemical 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 Ghani Chemical Industries are associated (or correlated) with MCB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB Investment Manag has no effect on the direction of Ghani Chemical i.e., Ghani Chemical and MCB Investment go up and down completely randomly.
Pair Corralation between Ghani Chemical and MCB Investment
Assuming the 90 days trading horizon Ghani Chemical is expected to generate 2.5 times less return on investment than MCB Investment. In addition to that, Ghani Chemical is 1.39 times more volatile than MCB Investment Manag. It trades about 0.05 of its total potential returns per unit of risk. MCB Investment Manag is currently generating about 0.17 per unit of volatility. If you would invest 2,242 in MCB Investment Manag on August 29, 2024 and sell it today you would earn a total of 2,867 from holding MCB Investment Manag or generate 127.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.68% |
| Values | Daily Returns |
Ghani Chemical Industries vs. MCB Investment Manag
Performance |
| Timeline |
| Ghani Chemical Industries |
| MCB Investment Manag |
Ghani Chemical and MCB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghani Chemical and MCB Investment
The main advantage of trading using opposite Ghani Chemical and MCB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghani Chemical position performs unexpectedly, MCB Investment 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 MCB Investment will offset losses from the drop in MCB Investment's long position.| Ghani Chemical vs. Habib Insurance | Ghani Chemical vs. Ghandhara Automobile | Ghani Chemical vs. Century Insurance | Ghani Chemical vs. Reliance Weaving Mills |
| MCB Investment vs. Habib Insurance | MCB Investment vs. Ghandhara Automobile | MCB Investment vs. Century Insurance | MCB Investment vs. Reliance Weaving Mills |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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