Correlation Between MCB Investment and Ittehad Chemicals
Can any of the company-specific risk be diversified away by investing in both MCB Investment and Ittehad Chemicals 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 Ittehad Chemicals 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 Ittehad Chemicals, you can compare the effects of market volatilities on MCB Investment and Ittehad Chemicals 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 Ittehad Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Investment and Ittehad Chemicals.
Diversification Opportunities for MCB Investment and Ittehad Chemicals
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MCB and Ittehad is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding MCB Investment Manag and Ittehad Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ittehad Chemicals 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 Ittehad Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ittehad Chemicals has no effect on the direction of MCB Investment i.e., MCB Investment and Ittehad Chemicals go up and down completely randomly.
Pair Corralation between MCB Investment and Ittehad Chemicals
Assuming the 90 days trading horizon MCB Investment Manag is expected to generate 1.73 times more return on investment than Ittehad Chemicals. However, MCB Investment is 1.73 times more volatile than Ittehad Chemicals. It trades about 0.11 of its potential returns per unit of risk. Ittehad Chemicals is currently generating about 0.11 per unit of risk. If you would invest 1,478 in MCB Investment Manag on November 4, 2024 and sell it today you would earn a total of 5,571 from holding MCB Investment Manag or generate 376.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 92.57% |
| Values | Daily Returns |
MCB Investment Manag vs. Ittehad Chemicals
Performance |
| Timeline |
| MCB Investment Manag |
| Ittehad Chemicals |
MCB Investment and Ittehad Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB Investment and Ittehad Chemicals
The main advantage of trading using opposite MCB Investment and Ittehad Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB Investment position performs unexpectedly, Ittehad Chemicals 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 Ittehad Chemicals will offset losses from the drop in Ittehad Chemicals' long position.| MCB Investment vs. Habib Insurance | MCB Investment vs. IGI Life Insurance | MCB Investment vs. Premier Insurance | MCB Investment vs. Pakistan Tobacco |
| Ittehad Chemicals vs. Mughal Iron Steel | Ittehad Chemicals vs. MCB Investment Manag | Ittehad Chemicals vs. Beco Steel | Ittehad Chemicals vs. Sardar Chemical Industries |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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