Correlation Between Mari Petroleum and Askari General
Can any of the company-specific risk be diversified away by investing in both Mari Petroleum and Askari General 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 Askari General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mari Petroleum and Askari General Insurance, you can compare the effects of market volatilities on Mari Petroleum and Askari General 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 Askari General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mari Petroleum and Askari General.
Diversification Opportunities for Mari Petroleum and Askari General
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mari and Askari is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and Askari General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Askari General Insurance 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 Askari General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Askari General Insurance has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and Askari General go up and down completely randomly.
Pair Corralation between Mari Petroleum and Askari General
Assuming the 90 days trading horizon Mari Petroleum is expected to generate 1.23 times more return on investment than Askari General. However, Mari Petroleum is 1.23 times more volatile than Askari General Insurance. It trades about 0.17 of its potential returns per unit of risk. Askari General Insurance is currently generating about 0.16 per unit of risk. If you would invest 42,608 in Mari Petroleum on August 28, 2024 and sell it today you would earn a total of 3,056 from holding Mari Petroleum or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mari Petroleum vs. Askari General Insurance
Performance |
| Timeline |
| Mari Petroleum |
| Askari General Insurance |
Mari Petroleum and Askari General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mari Petroleum and Askari General
The main advantage of trading using opposite Mari Petroleum and Askari General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mari Petroleum position performs unexpectedly, Askari General 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 Askari General will offset losses from the drop in Askari General's long position.| Mari Petroleum vs. JS Global Banking | Mari Petroleum vs. Century Insurance | Mari Petroleum vs. Jubilee Life Insurance | Mari Petroleum vs. Unity Foods |
| Askari General vs. United Insurance | Askari General vs. Bank of Punjab | Askari General vs. Jubilee Life Insurance | Askari General vs. Reliance Insurance Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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