Correlation Between JS Investments and Murree Brewery
Can any of the company-specific risk be diversified away by investing in both JS Investments 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 JS Investments and Murree Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Investments and Murree Brewery, you can compare the effects of market volatilities on JS Investments 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 JS Investments with a short position of Murree Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and Murree Brewery.
Diversification Opportunities for JS Investments and Murree Brewery
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JSIL and Murree is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Murree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murree Brewery and JS Investments 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 JS Investments 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 JS Investments i.e., JS Investments and Murree Brewery go up and down completely randomly.
Pair Corralation between JS Investments and Murree Brewery
Assuming the 90 days trading horizon JS Investments is expected to under-perform the Murree Brewery. In addition to that, JS Investments is 1.86 times more volatile than Murree Brewery. It trades about -0.01 of its total potential returns per unit of risk. Murree Brewery is currently generating about 0.35 per unit of volatility. If you would invest 58,814 in Murree Brewery on August 25, 2024 and sell it today you would earn a total of 8,570 from holding Murree Brewery or generate 14.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JS Investments vs. Murree Brewery
Performance |
| Timeline |
| JS Investments |
| Murree Brewery |
JS Investments and Murree Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Investments and Murree Brewery
The main advantage of trading using opposite JS Investments and Murree Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Investments 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.| JS Investments vs. Amreli Steels | JS Investments vs. Dost Steels | JS Investments vs. Unilever Pakistan Foods | JS Investments vs. Shifa International Hospitals |
| Murree Brewery vs. Habib Insurance | Murree Brewery vs. Ghandhara Automobile | Murree Brewery vs. Century Insurance | Murree Brewery 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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