Correlation Between MCB Bank and Attock Petroleum
Can any of the company-specific risk be diversified away by investing in both MCB Bank and Attock 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 MCB Bank and Attock Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MCB Bank and Attock Petroleum, you can compare the effects of market volatilities on MCB Bank and Attock 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 MCB Bank with a short position of Attock Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Bank and Attock Petroleum.
Diversification Opportunities for MCB Bank and Attock Petroleum
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between MCB and Attock is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding MCB Bank and Attock Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Attock Petroleum 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 Attock Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Attock Petroleum has no effect on the direction of MCB Bank i.e., MCB Bank and Attock Petroleum go up and down completely randomly.
Pair Corralation between MCB Bank and Attock Petroleum
Assuming the 90 days trading horizon MCB Bank is expected to generate 1.12 times more return on investment than Attock Petroleum. However, MCB Bank is 1.12 times more volatile than Attock Petroleum. It trades about 0.09 of its potential returns per unit of risk. Attock Petroleum is currently generating about -0.09 per unit of risk. If you would invest 28,265 in MCB Bank on November 28, 2024 and sell it today you would earn a total of 741.00 from holding MCB Bank or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
MCB Bank vs. Attock Petroleum
Performance |
| Timeline |
| MCB Bank |
| Attock Petroleum |
MCB Bank and Attock Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB Bank and Attock Petroleum
The main advantage of trading using opposite MCB Bank and Attock Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB Bank position performs unexpectedly, Attock 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 Attock Petroleum will offset losses from the drop in Attock Petroleum's long position.| MCB Bank vs. Jubilee Life Insurance | MCB Bank vs. Big Bird Foods | MCB Bank vs. Dost Steels | MCB Bank vs. Air Link Communication |
| Attock Petroleum vs. Matco Foods | Attock Petroleum vs. National Foods | Attock Petroleum vs. The Organic Meat | Attock Petroleum vs. Pak Datacom |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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