Correlation Between MCB Investment and ORIX Leasing
Can any of the company-specific risk be diversified away by investing in both MCB Investment and ORIX Leasing 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 ORIX Leasing 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 ORIX Leasing Pakistan, you can compare the effects of market volatilities on MCB Investment and ORIX Leasing 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 ORIX Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Investment and ORIX Leasing.
Diversification Opportunities for MCB Investment and ORIX Leasing
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MCB and ORIX is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding MCB Investment Manag and ORIX Leasing Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX Leasing Pakistan 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 ORIX Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX Leasing Pakistan has no effect on the direction of MCB Investment i.e., MCB Investment and ORIX Leasing go up and down completely randomly.
Pair Corralation between MCB Investment and ORIX Leasing
Assuming the 90 days trading horizon MCB Investment Manag is expected to generate 2.33 times more return on investment than ORIX Leasing. However, MCB Investment is 2.33 times more volatile than ORIX Leasing Pakistan. It trades about 0.11 of its potential returns per unit of risk. ORIX Leasing Pakistan is currently generating about 0.13 per unit of risk. If you would invest 1,437 in MCB Investment Manag on September 14, 2024 and sell it today you would earn a total of 5,063 from holding MCB Investment Manag or generate 352.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.34% |
| Values | Daily Returns |
MCB Investment Manag vs. ORIX Leasing Pakistan
Performance |
| Timeline |
| MCB Investment Manag |
| ORIX Leasing Pakistan |
MCB Investment and ORIX Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB Investment and ORIX Leasing
The main advantage of trading using opposite MCB Investment and ORIX Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB Investment position performs unexpectedly, ORIX Leasing 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 ORIX Leasing will offset losses from the drop in ORIX Leasing's long position.| MCB Investment vs. Habib Insurance | MCB Investment vs. Ghandhara Automobile | MCB Investment vs. Century Insurance | MCB Investment vs. Reliance Weaving Mills |
| ORIX Leasing vs. Orient Rental Modaraba | ORIX Leasing vs. MCB Investment Manag | ORIX Leasing vs. Quice Food Industries | ORIX Leasing vs. TPL 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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