Correlation Between Mari Petroleum and Agritech
Can any of the company-specific risk be diversified away by investing in both Mari Petroleum and Agritech 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 Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mari Petroleum and Agritech, you can compare the effects of market volatilities on Mari Petroleum and Agritech 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 Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mari Petroleum and Agritech.
Diversification Opportunities for Mari Petroleum and Agritech
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mari and Agritech is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agritech 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 Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agritech has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and Agritech go up and down completely randomly.
Pair Corralation between Mari Petroleum and Agritech
Assuming the 90 days trading horizon Mari Petroleum is expected to generate 1.3 times more return on investment than Agritech. However, Mari Petroleum is 1.3 times more volatile than Agritech. It trades about 0.2 of its potential returns per unit of risk. Agritech is currently generating about 0.08 per unit of risk. If you would invest 41,360 in Mari Petroleum on August 31, 2024 and sell it today you would earn a total of 4,434 from holding Mari Petroleum or generate 10.72% 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. Agritech
Performance |
| Timeline |
| Mari Petroleum |
| Agritech |
Mari Petroleum and Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mari Petroleum and Agritech
The main advantage of trading using opposite Mari Petroleum and Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mari Petroleum position performs unexpectedly, Agritech 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 Agritech will offset losses from the drop in Agritech's long position.| Mari Petroleum vs. Air Link Communication | Mari Petroleum vs. Wah Nobel Chemicals | Mari Petroleum vs. Oil and Gas | Mari Petroleum vs. National Foods |
| Agritech vs. Matco Foods | Agritech vs. Unilever Pakistan Foods | Agritech vs. Roshan Packages | Agritech vs. Pakistan Synthetics |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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