Correlation Between Meezan Bank and Leather Up
Can any of the company-specific risk be diversified away by investing in both Meezan Bank and Leather Up 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 Leather Up into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meezan Bank and Leather Up, you can compare the effects of market volatilities on Meezan Bank and Leather Up 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 Leather Up. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meezan Bank and Leather Up.
Diversification Opportunities for Meezan Bank and Leather Up
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Meezan and Leather is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Meezan Bank and Leather Up in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leather Up 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 Leather Up. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leather Up has no effect on the direction of Meezan Bank i.e., Meezan Bank and Leather Up go up and down completely randomly.
Pair Corralation between Meezan Bank and Leather Up
Assuming the 90 days trading horizon Meezan Bank is expected to generate 9.99 times less return on investment than Leather Up. But when comparing it to its historical volatility, Meezan Bank is 2.5 times less risky than Leather Up. It trades about 0.03 of its potential returns per unit of risk. Leather Up is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,464 in Leather Up on September 3, 2024 and sell it today you would earn a total of 400.00 from holding Leather Up or generate 27.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.94% |
| Values | Daily Returns |
Meezan Bank vs. Leather Up
Performance |
| Timeline |
| Meezan Bank |
| Leather Up |
Meezan Bank and Leather Up Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meezan Bank and Leather Up
The main advantage of trading using opposite Meezan Bank and Leather Up positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meezan Bank position performs unexpectedly, Leather Up 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 Leather Up will offset losses from the drop in Leather Up's long position.| Meezan Bank vs. Masood Textile Mills | Meezan Bank vs. Fauji Foods | Meezan Bank vs. KSB Pumps | Meezan Bank vs. Mari Petroleum |
| Leather Up vs. EFU General Insurance | Leather Up vs. Silkbank | Leather Up vs. Meezan Bank | Leather Up vs. Beco Steel |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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