Correlation Between MCB Investment and Agha Steel
Can any of the company-specific risk be diversified away by investing in both MCB Investment and Agha Steel 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 Investment and Agha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MCB Investment Manag and Agha Steel Industries, you can compare the effects of market volatilities on MCB Investment and Agha Steel 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 Investment with a short position of Agha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Investment and Agha Steel.
Diversification Opportunities for MCB Investment and Agha Steel
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MCB and Agha is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding MCB Investment Manag and Agha Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agha Steel Industries and MCB Investment 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 Investment Manag are associated (or correlated) with Agha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agha Steel Industries has no effect on the direction of MCB Investment i.e., MCB Investment and Agha Steel go up and down completely randomly.
Pair Corralation between MCB Investment and Agha Steel
Assuming the 90 days trading horizon MCB Investment Manag is expected to generate 2.2 times more return on investment than Agha Steel. However, MCB Investment is 2.2 times more volatile than Agha Steel Industries. It trades about 0.04 of its potential returns per unit of risk. Agha Steel Industries is currently generating about -0.29 per unit of risk. If you would invest 6,939 in MCB Investment Manag on November 4, 2024 and sell it today you would earn a total of 110.00 from holding MCB Investment Manag or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCB Investment Manag vs. Agha Steel Industries
Performance |
| Timeline |
| MCB Investment Manag |
| Agha Steel Industries |
MCB Investment and Agha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB Investment and Agha Steel
The main advantage of trading using opposite MCB Investment and Agha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB Investment position performs unexpectedly, Agha Steel 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 Agha Steel will offset losses from the drop in Agha Steel's long position.| MCB Investment vs. Habib Insurance | MCB Investment vs. IGI Life Insurance | MCB Investment vs. Premier Insurance | MCB Investment vs. Pakistan Tobacco |
| Agha Steel vs. Habib Insurance | Agha Steel vs. Ghandhara Automobile | Agha Steel vs. Shadab Textile Mills | Agha Steel vs. Century Insurance |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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