Correlation Between Mari Petroleum and Allied Bank
Can any of the company-specific risk be diversified away by investing in both Mari Petroleum and Allied 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 Mari Petroleum and Allied Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mari Petroleum and Allied Bank, you can compare the effects of market volatilities on Mari Petroleum and Allied 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 Mari Petroleum with a short position of Allied Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mari Petroleum and Allied Bank.
Diversification Opportunities for Mari Petroleum and Allied Bank
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mari and Allied is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and Allied Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Bank and Mari Petroleum 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 Mari Petroleum are associated (or correlated) with Allied Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Bank has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and Allied Bank go up and down completely randomly.
Pair Corralation between Mari Petroleum and Allied Bank
Assuming the 90 days trading horizon Mari Petroleum is expected to generate 3.38 times more return on investment than Allied Bank. However, Mari Petroleum is 3.38 times more volatile than Allied Bank. It trades about 0.15 of its potential returns per unit of risk. Allied Bank is currently generating about 0.18 per unit of risk. If you would invest 9,443 in Mari Petroleum on September 4, 2024 and sell it today you would earn a total of 38,972 from holding Mari Petroleum or generate 412.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.92% |
| Values | Daily Returns |
Mari Petroleum vs. Allied Bank
Performance |
| Timeline |
| Mari Petroleum |
| Allied Bank |
Mari Petroleum and Allied Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mari Petroleum and Allied Bank
The main advantage of trading using opposite Mari Petroleum and Allied Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mari Petroleum position performs unexpectedly, Allied 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 Allied Bank will offset losses from the drop in Allied Bank's long position.| Mari Petroleum vs. Pakistan Telecommunication | Mari Petroleum vs. Mughal Iron Steel | Mari Petroleum vs. Metropolitan Steel Corp | Mari Petroleum vs. WorldCall Telecom |
| Allied Bank vs. Masood Textile Mills | Allied Bank vs. Fauji Foods | Allied Bank vs. KSB Pumps | Allied Bank vs. Mari Petroleum |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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