Correlation Between Matco Foods and Ittehad Chemicals
Can any of the company-specific risk be diversified away by investing in both Matco Foods and Ittehad Chemicals 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 Ittehad Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matco Foods and Ittehad Chemicals, you can compare the effects of market volatilities on Matco Foods and Ittehad Chemicals 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 Ittehad Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matco Foods and Ittehad Chemicals.
Diversification Opportunities for Matco Foods and Ittehad Chemicals
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matco and Ittehad is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Matco Foods and Ittehad Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ittehad Chemicals 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 Ittehad Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ittehad Chemicals has no effect on the direction of Matco Foods i.e., Matco Foods and Ittehad Chemicals go up and down completely randomly.
Pair Corralation between Matco Foods and Ittehad Chemicals
Assuming the 90 days trading horizon Matco Foods is expected to generate 2.16 times more return on investment than Ittehad Chemicals. However, Matco Foods is 2.16 times more volatile than Ittehad Chemicals. It trades about 0.37 of its potential returns per unit of risk. Ittehad Chemicals is currently generating about 0.19 per unit of risk. If you would invest 2,374 in Matco Foods on August 24, 2024 and sell it today you would earn a total of 843.00 from holding Matco Foods or generate 35.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matco Foods vs. Ittehad Chemicals
Performance |
| Timeline |
| Matco Foods |
| Ittehad Chemicals |
Matco Foods and Ittehad Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matco Foods and Ittehad Chemicals
The main advantage of trading using opposite Matco Foods and Ittehad Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matco Foods position performs unexpectedly, Ittehad Chemicals 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 Ittehad Chemicals will offset losses from the drop in Ittehad Chemicals' long position.| Matco Foods vs. Security Investment Bank | Matco Foods vs. Habib Insurance | Matco Foods vs. Bank of Punjab | Matco Foods vs. Soneri Bank |
| Ittehad Chemicals vs. Crescent Star Insurance | Ittehad Chemicals vs. Nimir Industrial Chemical | Ittehad Chemicals vs. Hi Tech Lubricants | Ittehad Chemicals vs. Escorts Investment 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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