Correlation Between Meezan Bank and JS Investments
Can any of the company-specific risk be diversified away by investing in both Meezan Bank and JS Investments 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 Meezan Bank and JS Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meezan Bank and JS Investments, you can compare the effects of market volatilities on Meezan Bank and JS Investments 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 Meezan Bank with a short position of JS Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meezan Bank and JS Investments.
Diversification Opportunities for Meezan Bank and JS Investments
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meezan and JSIL is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Meezan Bank and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments and Meezan Bank 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 Meezan Bank are associated (or correlated) with JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of Meezan Bank i.e., Meezan Bank and JS Investments go up and down completely randomly.
Pair Corralation between Meezan Bank and JS Investments
Assuming the 90 days trading horizon Meezan Bank is expected to generate 1.17 times less return on investment than JS Investments. But when comparing it to its historical volatility, Meezan Bank is 2.26 times less risky than JS Investments. It trades about 0.13 of its potential returns per unit of risk. JS Investments is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,334 in JS Investments on September 4, 2024 and sell it today you would earn a total of 1,116 from holding JS Investments or generate 83.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 64.33% |
| Values | Daily Returns |
Meezan Bank vs. JS Investments
Performance |
| Timeline |
| Meezan Bank |
| JS Investments |
Meezan Bank and JS Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meezan Bank and JS Investments
The main advantage of trading using opposite Meezan Bank and JS Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meezan Bank position performs unexpectedly, JS Investments 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 JS Investments will offset losses from the drop in JS Investments' long position.| Meezan Bank vs. Matco Foods | Meezan Bank vs. Unilever Pakistan Foods | Meezan Bank vs. Shaheen Insurance | Meezan Bank vs. Allied Bank |
| JS Investments vs. Masood Textile Mills | JS Investments vs. Fauji Foods | JS Investments vs. KSB Pumps | JS Investments vs. Mari Petroleum |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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