Correlation Between Mari Petroleum and Khyber Tobacco
Can any of the company-specific risk be diversified away by investing in both Mari Petroleum and Khyber Tobacco 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 Khyber Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mari Petroleum and Khyber Tobacco, you can compare the effects of market volatilities on Mari Petroleum and Khyber Tobacco 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 Khyber Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mari Petroleum and Khyber Tobacco.
Diversification Opportunities for Mari Petroleum and Khyber Tobacco
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mari and Khyber is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and Khyber Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khyber Tobacco 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 Khyber Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khyber Tobacco has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and Khyber Tobacco go up and down completely randomly.
Pair Corralation between Mari Petroleum and Khyber Tobacco
Assuming the 90 days trading horizon Mari Petroleum is expected to generate 2.15 times more return on investment than Khyber Tobacco. However, Mari Petroleum is 2.15 times more volatile than Khyber Tobacco. It trades about 0.1 of its potential returns per unit of risk. Khyber Tobacco is currently generating about -0.04 per unit of risk. If you would invest 53,646 in Mari Petroleum on November 28, 2024 and sell it today you would earn a total of 3,177 from holding Mari Petroleum or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Mari Petroleum vs. Khyber Tobacco
Performance |
| Timeline |
| Mari Petroleum |
| Khyber Tobacco |
Mari Petroleum and Khyber Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mari Petroleum and Khyber Tobacco
The main advantage of trading using opposite Mari Petroleum and Khyber Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mari Petroleum position performs unexpectedly, Khyber Tobacco 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 Khyber Tobacco will offset losses from the drop in Khyber Tobacco's long position.| Mari Petroleum vs. Grays Leasing | Mari Petroleum vs. Big Bird Foods | Mari Petroleum vs. Sindh Modaraba Management | Mari Petroleum vs. Pak Datacom |
| Khyber Tobacco vs. Masood Textile Mills | Khyber Tobacco vs. Fauji Foods | Khyber Tobacco vs. KSB Pumps | Khyber Tobacco 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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