Correlation Between MCB Investment and Pakistan Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both MCB Investment and Pakistan Telecommunicatio 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 Telecommunicatio 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 Telecommunication, you can compare the effects of market volatilities on MCB Investment and Pakistan Telecommunicatio 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 Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Investment and Pakistan Telecommunicatio.
Diversification Opportunities for MCB Investment and Pakistan Telecommunicatio
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MCB and Pakistan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding MCB Investment Manag and Pakistan Telecommunication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Telecommunicatio 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 Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Telecommunicatio has no effect on the direction of MCB Investment i.e., MCB Investment and Pakistan Telecommunicatio go up and down completely randomly.
Pair Corralation between MCB Investment and Pakistan Telecommunicatio
Assuming the 90 days trading horizon MCB Investment Manag is expected to generate 0.72 times more return on investment than Pakistan Telecommunicatio. However, MCB Investment Manag is 1.38 times less risky than Pakistan Telecommunicatio. It trades about 0.18 of its potential returns per unit of risk. Pakistan Telecommunication is currently generating about 0.1 per unit of risk. If you would invest 1,353 in MCB Investment Manag on November 19, 2024 and sell it today you would earn a total of 6,907 from holding MCB Investment Manag or generate 510.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.68% |
| Values | Daily Returns |
MCB Investment Manag vs. Pakistan Telecommunication
Performance |
| Timeline |
| MCB Investment Manag |
| Pakistan Telecommunicatio |
MCB Investment and Pakistan Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB Investment and Pakistan Telecommunicatio
The main advantage of trading using opposite MCB Investment and Pakistan Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB Investment position performs unexpectedly, Pakistan Telecommunicatio 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 Telecommunicatio will offset losses from the drop in Pakistan Telecommunicatio's long position.| MCB Investment vs. ITTEFAQ Iron Industries | MCB Investment vs. National Foods | MCB Investment vs. Amreli Steels | MCB Investment vs. Unity Foods |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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