Correlation Between IBL HealthCare and MCB Investment
Can any of the company-specific risk be diversified away by investing in both IBL HealthCare 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 IBL HealthCare and MCB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBL HealthCare and MCB Investment Manag, you can compare the effects of market volatilities on IBL HealthCare 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 IBL HealthCare with a short position of MCB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBL HealthCare and MCB Investment.
Diversification Opportunities for IBL HealthCare and MCB Investment
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IBL and MCB is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding IBL HealthCare 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 IBL HealthCare 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 IBL HealthCare 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 IBL HealthCare i.e., IBL HealthCare and MCB Investment go up and down completely randomly.
Pair Corralation between IBL HealthCare and MCB Investment
Assuming the 90 days trading horizon IBL HealthCare is expected to generate 1.02 times less return on investment than MCB Investment. In addition to that, IBL HealthCare is 1.3 times more volatile than MCB Investment Manag. It trades about 0.38 of its total potential returns per unit of risk. MCB Investment Manag is currently generating about 0.5 per unit of volatility. If you would invest 3,987 in MCB Investment Manag on August 31, 2024 and sell it today you would earn a total of 2,014 from holding MCB Investment Manag or generate 50.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IBL HealthCare vs. MCB Investment Manag
Performance |
| Timeline |
| IBL HealthCare |
| MCB Investment Manag |
IBL HealthCare and MCB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IBL HealthCare and MCB Investment
The main advantage of trading using opposite IBL HealthCare and MCB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBL HealthCare 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.| IBL HealthCare vs. 786 Investment Limited | IBL HealthCare vs. Sindh Modaraba Management | IBL HealthCare vs. Air Link Communication | IBL HealthCare vs. AKD Hospitality |
| MCB Investment vs. Habib Insurance | MCB Investment vs. Century Insurance | MCB Investment vs. Reliance Weaving Mills | MCB Investment 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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