Correlation Between Mari Petroleum and Pakistan Petroleum
Can any of the company-specific risk be diversified away by investing in both Mari Petroleum and Pakistan Petroleum 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 Pakistan Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mari Petroleum and Pakistan Petroleum, you can compare the effects of market volatilities on Mari Petroleum and Pakistan Petroleum 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 Pakistan Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mari Petroleum and Pakistan Petroleum.
Diversification Opportunities for Mari Petroleum and Pakistan Petroleum
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mari and Pakistan is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and Pakistan Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Petroleum 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 Pakistan Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Petroleum has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and Pakistan Petroleum go up and down completely randomly.
Pair Corralation between Mari Petroleum and Pakistan Petroleum
Assuming the 90 days trading horizon Mari Petroleum is expected to generate 2.11 times more return on investment than Pakistan Petroleum. However, Mari Petroleum is 2.11 times more volatile than Pakistan Petroleum. It trades about 0.15 of its potential returns per unit of risk. Pakistan Petroleum is currently generating about 0.12 per unit of risk. If you would invest 4,483 in Mari Petroleum on August 28, 2024 and sell it today you would earn a total of 41,181 from holding Mari Petroleum or generate 918.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mari Petroleum vs. Pakistan Petroleum
Performance |
| Timeline |
| Mari Petroleum |
| Pakistan Petroleum |
Mari Petroleum and Pakistan Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mari Petroleum and Pakistan Petroleum
The main advantage of trading using opposite Mari Petroleum and Pakistan Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mari Petroleum position performs unexpectedly, Pakistan Petroleum 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 Pakistan Petroleum will offset losses from the drop in Pakistan Petroleum's long position.| Mari Petroleum vs. Shifa International Hospitals | Mari Petroleum vs. Honda Atlas Cars | Mari Petroleum vs. AKD Hospitality | Mari Petroleum vs. Jubilee Life Insurance |
| Pakistan Petroleum vs. Al Ghazi Tractors | Pakistan Petroleum vs. Shell Pakistan | Pakistan Petroleum vs. Nestle Pakistan | Pakistan Petroleum vs. Hinopak Motors |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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