Correlation Between Mari Petroleum and Amreli Steels
Can any of the company-specific risk be diversified away by investing in both Mari Petroleum and Amreli Steels 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 Amreli Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mari Petroleum and Amreli Steels, you can compare the effects of market volatilities on Mari Petroleum and Amreli Steels 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 Amreli Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mari Petroleum and Amreli Steels.
Diversification Opportunities for Mari Petroleum and Amreli Steels
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mari and Amreli is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and Amreli Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amreli Steels 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 Amreli Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amreli Steels has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and Amreli Steels go up and down completely randomly.
Pair Corralation between Mari Petroleum and Amreli Steels
Assuming the 90 days trading horizon Mari Petroleum is expected to generate 2.29 times more return on investment than Amreli Steels. However, Mari Petroleum is 2.29 times more volatile than Amreli Steels. It trades about 0.16 of its potential returns per unit of risk. Amreli Steels is currently generating about -0.04 per unit of risk. If you would invest 24,609 in Mari Petroleum on September 3, 2024 and sell it today you would earn a total of 21,613 from holding Mari Petroleum or generate 87.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mari Petroleum vs. Amreli Steels
Performance |
| Timeline |
| Mari Petroleum |
| Amreli Steels |
Mari Petroleum and Amreli Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mari Petroleum and Amreli Steels
The main advantage of trading using opposite Mari Petroleum and Amreli Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mari Petroleum position performs unexpectedly, Amreli Steels 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 Amreli Steels will offset losses from the drop in Amreli Steels' long position.| Mari Petroleum vs. Oil and Gas | Mari Petroleum vs. Pakistan State Oil | Mari Petroleum vs. Pakistan Petroleum | Mari Petroleum vs. Fauji Fertilizer |
| Amreli Steels vs. Masood Textile Mills | Amreli Steels vs. Fauji Foods | Amreli Steels vs. KSB Pumps | Amreli Steels 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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