Correlation Between Mari Petroleum and Reliance Weaving
Can any of the company-specific risk be diversified away by investing in both Mari Petroleum and Reliance Weaving 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 Reliance Weaving into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mari Petroleum and Reliance Weaving Mills, you can compare the effects of market volatilities on Mari Petroleum and Reliance Weaving 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 Reliance Weaving. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mari Petroleum and Reliance Weaving.
Diversification Opportunities for Mari Petroleum and Reliance Weaving
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mari and Reliance is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and Reliance Weaving Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Weaving Mills 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 Reliance Weaving. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Weaving Mills has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and Reliance Weaving go up and down completely randomly.
Pair Corralation between Mari Petroleum and Reliance Weaving
Assuming the 90 days trading horizon Mari Petroleum is expected to generate 1.04 times more return on investment than Reliance Weaving. However, Mari Petroleum is 1.04 times more volatile than Reliance Weaving Mills. It trades about -0.02 of its potential returns per unit of risk. Reliance Weaving Mills is currently generating about -0.02 per unit of risk. If you would invest 69,498 in Mari Petroleum on October 21, 2024 and sell it today you would lose (916.00) from holding Mari Petroleum or give up 1.32% 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. Reliance Weaving Mills
Performance |
| Timeline |
| Mari Petroleum |
| Reliance Weaving Mills |
Mari Petroleum and Reliance Weaving Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mari Petroleum and Reliance Weaving
The main advantage of trading using opposite Mari Petroleum and Reliance Weaving positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mari Petroleum position performs unexpectedly, Reliance Weaving 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 Reliance Weaving will offset losses from the drop in Reliance Weaving's long position.| Mari Petroleum vs. Unilever Pakistan Foods | Mari Petroleum vs. Sardar Chemical Industries | Mari Petroleum vs. Fauji Foods | Mari Petroleum vs. Big Bird Foods |
| Reliance Weaving vs. Masood Textile Mills | Reliance Weaving vs. Fauji Foods | Reliance Weaving vs. KSB Pumps | Reliance Weaving 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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