Correlation Between MCB Investment and Pakistan Aluminium
Can any of the company-specific risk be diversified away by investing in both MCB Investment and Pakistan Aluminium 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 Pakistan Aluminium 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 Pakistan Aluminium Beverage, you can compare the effects of market volatilities on MCB Investment and Pakistan Aluminium 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 Pakistan Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Investment and Pakistan Aluminium.
Diversification Opportunities for MCB Investment and Pakistan Aluminium
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MCB and Pakistan is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MCB Investment Manag and Pakistan Aluminium Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Aluminium 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 Pakistan Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Aluminium has no effect on the direction of MCB Investment i.e., MCB Investment and Pakistan Aluminium go up and down completely randomly.
Pair Corralation between MCB Investment and Pakistan Aluminium
Assuming the 90 days trading horizon MCB Investment Manag is expected to generate 1.25 times more return on investment than Pakistan Aluminium. However, MCB Investment is 1.25 times more volatile than Pakistan Aluminium Beverage. It trades about 0.13 of its potential returns per unit of risk. Pakistan Aluminium Beverage is currently generating about 0.09 per unit of risk. If you would invest 3,031 in MCB Investment Manag on August 26, 2024 and sell it today you would earn a total of 1,236 from holding MCB Investment Manag or generate 40.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.18% |
| Values | Daily Returns |
MCB Investment Manag vs. Pakistan Aluminium Beverage
Performance |
| Timeline |
| MCB Investment Manag |
| Pakistan Aluminium |
MCB Investment and Pakistan Aluminium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB Investment and Pakistan Aluminium
The main advantage of trading using opposite MCB Investment and Pakistan Aluminium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB Investment position performs unexpectedly, Pakistan Aluminium 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 Pakistan Aluminium will offset losses from the drop in Pakistan Aluminium's long position.| MCB Investment vs. Faysal Bank | MCB Investment vs. Adamjee Insurance | MCB Investment vs. Hi Tech Lubricants | MCB Investment vs. Agritech |
| Pakistan Aluminium vs. Habib Insurance | Pakistan Aluminium vs. Ghandhara Automobile | Pakistan Aluminium vs. Century Insurance | Pakistan Aluminium vs. Reliance Weaving Mills |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |