Correlation Between Matco Foods and Hub Power
Can any of the company-specific risk be diversified away by investing in both Matco Foods and Hub Power 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 Hub Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matco Foods and Hub Power, you can compare the effects of market volatilities on Matco Foods and Hub Power 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 Hub Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matco Foods and Hub Power.
Diversification Opportunities for Matco Foods and Hub Power
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Matco and Hub is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Matco Foods and Hub Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub Power 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 Hub Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub Power has no effect on the direction of Matco Foods i.e., Matco Foods and Hub Power go up and down completely randomly.
Pair Corralation between Matco Foods and Hub Power
Assuming the 90 days trading horizon Matco Foods is expected to generate 5.55 times less return on investment than Hub Power. In addition to that, Matco Foods is 1.31 times more volatile than Hub Power. It trades about 0.01 of its total potential returns per unit of risk. Hub Power is currently generating about 0.1 per unit of volatility. If you would invest 5,427 in Hub Power on September 4, 2024 and sell it today you would earn a total of 5,502 from holding Hub Power or generate 101.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.45% |
| Values | Daily Returns |
Matco Foods vs. Hub Power
Performance |
| Timeline |
| Matco Foods |
| Hub Power |
Matco Foods and Hub Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matco Foods and Hub Power
The main advantage of trading using opposite Matco Foods and Hub Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matco Foods position performs unexpectedly, Hub Power 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 Hub Power will offset losses from the drop in Hub Power's long position.| Matco Foods vs. Shaheen Insurance | Matco Foods vs. Meezan Bank | Matco Foods vs. TPL Insurance | Matco Foods vs. United Insurance |
| Hub Power vs. Pakistan Telecommunication | Hub Power vs. Orient Rental Modaraba | Hub Power vs. Air Link Communication | Hub Power vs. Pakistan Tobacco |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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