Correlation Between Ittehad Chemicals and Matco Foods
Can any of the company-specific risk be diversified away by investing in both Ittehad Chemicals and Matco Foods 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 Ittehad Chemicals and Matco Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ittehad Chemicals and Matco Foods, you can compare the effects of market volatilities on Ittehad Chemicals and Matco Foods 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 Ittehad Chemicals with a short position of Matco Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ittehad Chemicals and Matco Foods.
Diversification Opportunities for Ittehad Chemicals and Matco Foods
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ittehad and Matco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ittehad Chemicals and Matco Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matco Foods and Ittehad Chemicals 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 Ittehad Chemicals are associated (or correlated) with Matco Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matco Foods has no effect on the direction of Ittehad Chemicals i.e., Ittehad Chemicals and Matco Foods go up and down completely randomly.
Pair Corralation between Ittehad Chemicals and Matco Foods
Assuming the 90 days trading horizon Ittehad Chemicals is expected to generate 0.77 times more return on investment than Matco Foods. However, Ittehad Chemicals is 1.3 times less risky than Matco Foods. It trades about 0.1 of its potential returns per unit of risk. Matco Foods is currently generating about 0.06 per unit of risk. If you would invest 2,946 in Ittehad Chemicals on November 19, 2024 and sell it today you would earn a total of 4,374 from holding Ittehad Chemicals or generate 148.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.57% |
| Values | Daily Returns |
Ittehad Chemicals vs. Matco Foods
Performance |
| Timeline |
| Ittehad Chemicals |
| Matco Foods |
Ittehad Chemicals and Matco Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ittehad Chemicals and Matco Foods
The main advantage of trading using opposite Ittehad Chemicals and Matco Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ittehad Chemicals position performs unexpectedly, Matco Foods 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 Matco Foods will offset losses from the drop in Matco Foods' long position.| Ittehad Chemicals vs. Premier Insurance | Ittehad Chemicals vs. Shaheen Insurance | Ittehad Chemicals vs. Habib Insurance | Ittehad Chemicals vs. Aisha Steel Mills |
| Matco Foods vs. TPL Insurance | Matco Foods vs. Unity Foods | Matco Foods vs. National Bank of | Matco Foods vs. Universal Insurance |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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