Correlation Between Mari Petroleum and Pakistan State
Can any of the company-specific risk be diversified away by investing in both Mari Petroleum and Pakistan State 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 State 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 State Oil, you can compare the effects of market volatilities on Mari Petroleum and Pakistan State 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 State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mari Petroleum and Pakistan State.
Diversification Opportunities for Mari Petroleum and Pakistan State
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mari and Pakistan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and Pakistan State Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan State Oil 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 State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan State Oil has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and Pakistan State go up and down completely randomly.
Pair Corralation between Mari Petroleum and Pakistan State
Assuming the 90 days trading horizon Mari Petroleum is expected to under-perform the Pakistan State. In addition to that, Mari Petroleum is 1.19 times more volatile than Pakistan State Oil. It trades about -0.2 of its total potential returns per unit of risk. Pakistan State Oil is currently generating about -0.17 per unit of volatility. If you would invest 41,908 in Pakistan State Oil on October 26, 2024 and sell it today you would lose (3,456) from holding Pakistan State Oil or give up 8.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mari Petroleum vs. Pakistan State Oil
Performance |
| Timeline |
| Mari Petroleum |
| Pakistan State Oil |
Mari Petroleum and Pakistan State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mari Petroleum and Pakistan State
The main advantage of trading using opposite Mari Petroleum and Pakistan State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mari Petroleum position performs unexpectedly, Pakistan State 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 State will offset losses from the drop in Pakistan State's long position.| Mari Petroleum vs. Air Link Communication | Mari Petroleum vs. Fateh Sports Wear | Mari Petroleum vs. Packages | Mari Petroleum vs. Oil and Gas |
| Pakistan State vs. Ittehad Chemicals | Pakistan State vs. Avanceon | Pakistan State vs. JS Investments | Pakistan State vs. National Foods |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |