Correlation Between Matco Foods and Adamjee Insurance
Can any of the company-specific risk be diversified away by investing in both Matco Foods and Adamjee 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 Matco Foods and Adamjee Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matco Foods and Adamjee Insurance, you can compare the effects of market volatilities on Matco Foods and Adamjee 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 Matco Foods with a short position of Adamjee Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matco Foods and Adamjee Insurance.
Diversification Opportunities for Matco Foods and Adamjee Insurance
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Matco and Adamjee is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Matco Foods and Adamjee Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamjee Insurance and Matco Foods 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 Matco Foods are associated (or correlated) with Adamjee Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adamjee Insurance has no effect on the direction of Matco Foods i.e., Matco Foods and Adamjee Insurance go up and down completely randomly.
Pair Corralation between Matco Foods and Adamjee Insurance
Assuming the 90 days trading horizon Matco Foods is expected to generate 1.83 times more return on investment than Adamjee Insurance. However, Matco Foods is 1.83 times more volatile than Adamjee Insurance. It trades about 0.09 of its potential returns per unit of risk. Adamjee Insurance is currently generating about 0.06 per unit of risk. If you would invest 2,705 in Matco Foods on September 2, 2024 and sell it today you would earn a total of 188.00 from holding Matco Foods or generate 6.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matco Foods vs. Adamjee Insurance
Performance |
| Timeline |
| Matco Foods |
| Adamjee Insurance |
Matco Foods and Adamjee Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matco Foods and Adamjee Insurance
The main advantage of trading using opposite Matco Foods and Adamjee Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matco Foods position performs unexpectedly, Adamjee 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 Adamjee Insurance will offset losses from the drop in Adamjee Insurance's long position.| Matco Foods vs. Hi Tech Lubricants | Matco Foods vs. The Organic Meat | Matco Foods vs. Shifa International Hospitals | Matco Foods vs. Unity Foods |
| Adamjee Insurance vs. Habib Bank | Adamjee Insurance vs. National Bank of | Adamjee Insurance vs. United Bank | Adamjee Insurance vs. MCB Bank |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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