Correlation Between MCB Bank and AKD Hospitality
Can any of the company-specific risk be diversified away by investing in both MCB Bank and AKD Hospitality 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 MCB Bank and AKD Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MCB Bank and AKD Hospitality, you can compare the effects of market volatilities on MCB Bank and AKD Hospitality 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 MCB Bank with a short position of AKD Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Bank and AKD Hospitality.
Diversification Opportunities for MCB Bank and AKD Hospitality
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MCB and AKD is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding MCB Bank and AKD Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKD Hospitality and MCB Bank 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 MCB Bank are associated (or correlated) with AKD Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKD Hospitality has no effect on the direction of MCB Bank i.e., MCB Bank and AKD Hospitality go up and down completely randomly.
Pair Corralation between MCB Bank and AKD Hospitality
Assuming the 90 days trading horizon MCB Bank is expected to generate 0.73 times more return on investment than AKD Hospitality. However, MCB Bank is 1.37 times less risky than AKD Hospitality. It trades about 0.22 of its potential returns per unit of risk. AKD Hospitality is currently generating about 0.08 per unit of risk. If you would invest 24,413 in MCB Bank on September 1, 2024 and sell it today you would earn a total of 2,713 from holding MCB Bank or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCB Bank vs. AKD Hospitality
Performance |
| Timeline |
| MCB Bank |
| AKD Hospitality |
MCB Bank and AKD Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB Bank and AKD Hospitality
The main advantage of trading using opposite MCB Bank and AKD Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB Bank position performs unexpectedly, AKD Hospitality 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 AKD Hospitality will offset losses from the drop in AKD Hospitality's long position.| MCB Bank vs. Oil and Gas | MCB Bank vs. Pakistan State Oil | MCB Bank vs. Pakistan Petroleum | MCB Bank vs. Fauji Fertilizer |
| AKD Hospitality vs. Habib Insurance | AKD Hospitality vs. Century Insurance | AKD Hospitality vs. Reliance Weaving Mills | AKD Hospitality vs. Media Times |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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