Correlation Between MCB Investment and Gatron Industries
Can any of the company-specific risk be diversified away by investing in both MCB Investment and Gatron Industries 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 Gatron Industries 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 Gatron Industries, you can compare the effects of market volatilities on MCB Investment and Gatron Industries 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 Gatron Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Investment and Gatron Industries.
Diversification Opportunities for MCB Investment and Gatron Industries
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MCB and Gatron is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding MCB Investment Manag and Gatron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatron 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 Gatron Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatron Industries has no effect on the direction of MCB Investment i.e., MCB Investment and Gatron Industries go up and down completely randomly.
Pair Corralation between MCB Investment and Gatron Industries
Assuming the 90 days trading horizon MCB Investment Manag is expected to generate 2.31 times more return on investment than Gatron Industries. However, MCB Investment is 2.31 times more volatile than Gatron Industries. It trades about -0.07 of its potential returns per unit of risk. Gatron Industries is currently generating about -0.23 per unit of risk. If you would invest 6,556 in MCB Investment Manag on October 21, 2024 and sell it today you would lose (296.00) from holding MCB Investment Manag or give up 4.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCB Investment Manag vs. Gatron Industries
Performance |
| Timeline |
| MCB Investment Manag |
| Gatron Industries |
MCB Investment and Gatron Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB Investment and Gatron Industries
The main advantage of trading using opposite MCB Investment and Gatron Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB Investment position performs unexpectedly, Gatron Industries 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 Gatron Industries will offset losses from the drop in Gatron Industries' long position.| MCB Investment vs. Unity Foods | MCB Investment vs. National Foods | MCB Investment vs. Ghandhara Automobile | MCB Investment vs. Dost Steels |
| Gatron Industries vs. Nimir Industrial Chemical | Gatron Industries vs. Hi Tech Lubricants | Gatron Industries vs. Atlas Insurance | Gatron Industries vs. Pakistan Telecommunication |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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