Correlation Between Mari Petroleum and Sitara Chemical
Can any of the company-specific risk be diversified away by investing in both Mari Petroleum and Sitara Chemical 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 Sitara Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mari Petroleum and Sitara Chemical Industries, you can compare the effects of market volatilities on Mari Petroleum and Sitara Chemical 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 Sitara Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mari Petroleum and Sitara Chemical.
Diversification Opportunities for Mari Petroleum and Sitara Chemical
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mari and Sitara is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and Sitara Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitara Chemical Indu 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 Sitara Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitara Chemical Indu has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and Sitara Chemical go up and down completely randomly.
Pair Corralation between Mari Petroleum and Sitara Chemical
Assuming the 90 days trading horizon Mari Petroleum is expected to generate 0.88 times more return on investment than Sitara Chemical. However, Mari Petroleum is 1.14 times less risky than Sitara Chemical. It trades about 0.04 of its potential returns per unit of risk. Sitara Chemical Industries is currently generating about -0.03 per unit of risk. If you would invest 42,608 in Mari Petroleum on August 29, 2024 and sell it today you would earn a total of 738.00 from holding Mari Petroleum or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mari Petroleum vs. Sitara Chemical Industries
Performance |
| Timeline |
| Mari Petroleum |
| Sitara Chemical Indu |
Mari Petroleum and Sitara Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mari Petroleum and Sitara Chemical
The main advantage of trading using opposite Mari Petroleum and Sitara Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mari Petroleum position performs unexpectedly, Sitara Chemical 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 Sitara Chemical will offset losses from the drop in Sitara Chemical'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 |
| Sitara Chemical vs. Masood Textile Mills | Sitara Chemical vs. Fauji Foods | Sitara Chemical vs. KSB Pumps | Sitara Chemical 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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