Correlation Between MCB Investment and Al Ghazi
Can any of the company-specific risk be diversified away by investing in both MCB Investment and Al Ghazi 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 Al Ghazi 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 Al Ghazi Tractors, you can compare the effects of market volatilities on MCB Investment and Al Ghazi 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 Al Ghazi. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Investment and Al Ghazi.
Diversification Opportunities for MCB Investment and Al Ghazi
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MCB and AGTL is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding MCB Investment Manag and Al Ghazi Tractors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Ghazi Tractors 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 Al Ghazi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Ghazi Tractors has no effect on the direction of MCB Investment i.e., MCB Investment and Al Ghazi go up and down completely randomly.
Pair Corralation between MCB Investment and Al Ghazi
Assuming the 90 days trading horizon MCB Investment Manag is expected to generate 1.48 times more return on investment than Al Ghazi. However, MCB Investment is 1.48 times more volatile than Al Ghazi Tractors. It trades about 0.3 of its potential returns per unit of risk. Al Ghazi Tractors is currently generating about 0.23 per unit of risk. If you would invest 3,713 in MCB Investment Manag on September 12, 2024 and sell it today you would earn a total of 3,086 from holding MCB Investment Manag or generate 83.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCB Investment Manag vs. Al Ghazi Tractors
Performance |
| Timeline |
| MCB Investment Manag |
| Al Ghazi Tractors |
MCB Investment and Al Ghazi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB Investment and Al Ghazi
The main advantage of trading using opposite MCB Investment and Al Ghazi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB Investment position performs unexpectedly, Al Ghazi 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 Al Ghazi will offset losses from the drop in Al Ghazi's long position.| MCB Investment vs. Metropolitan Steel Corp | MCB Investment vs. Roshan Packages | MCB Investment vs. Unilever Pakistan Foods | MCB Investment vs. Agha Steel Industries |
| Al Ghazi vs. Matco Foods | Al Ghazi vs. Nimir Industrial Chemical | Al Ghazi vs. Habib Insurance | Al Ghazi 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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