Correlation Between MCB Investment and United Insurance
Can any of the company-specific risk be diversified away by investing in both MCB Investment and United Insurance 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 United Insurance 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 United Insurance, you can compare the effects of market volatilities on MCB Investment and United Insurance 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 United Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Investment and United Insurance.
Diversification Opportunities for MCB Investment and United Insurance
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MCB and United is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding MCB Investment Manag and United Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance 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 United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance has no effect on the direction of MCB Investment i.e., MCB Investment and United Insurance go up and down completely randomly.
Pair Corralation between MCB Investment and United Insurance
Assuming the 90 days trading horizon MCB Investment Manag is expected to generate 1.42 times more return on investment than United Insurance. However, MCB Investment is 1.42 times more volatile than United Insurance. It trades about 0.12 of its potential returns per unit of risk. United Insurance is currently generating about 0.12 per unit of risk. If you would invest 1,411 in MCB Investment Manag on September 3, 2024 and sell it today you would earn a total of 5,176 from holding MCB Investment Manag or generate 366.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.08% |
| Values | Daily Returns |
MCB Investment Manag vs. United Insurance
Performance |
| Timeline |
| MCB Investment Manag |
| United Insurance |
MCB Investment and United Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB Investment and United Insurance
The main advantage of trading using opposite MCB Investment and United Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB Investment position performs unexpectedly, United Insurance 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 United Insurance will offset losses from the drop in United Insurance's long position.| MCB Investment vs. The Organic Meat | MCB Investment vs. Orient Rental Modaraba | MCB Investment vs. United Insurance | MCB Investment vs. National Foods |
| United Insurance vs. Oil and Gas | United Insurance vs. Pakistan State Oil | United Insurance vs. Pakistan Petroleum | United Insurance vs. Fauji Fertilizer |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |