Correlation Between Matco Foods and Meezan Bank
Can any of the company-specific risk be diversified away by investing in both Matco Foods and Meezan Bank 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 Meezan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matco Foods and Meezan Bank, you can compare the effects of market volatilities on Matco Foods and Meezan Bank 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 Meezan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matco Foods and Meezan Bank.
Diversification Opportunities for Matco Foods and Meezan Bank
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Matco and Meezan is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Matco Foods and Meezan Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meezan Bank 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 Meezan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meezan Bank has no effect on the direction of Matco Foods i.e., Matco Foods and Meezan Bank go up and down completely randomly.
Pair Corralation between Matco Foods and Meezan Bank
Assuming the 90 days trading horizon Matco Foods is expected to under-perform the Meezan Bank. In addition to that, Matco Foods is 1.46 times more volatile than Meezan Bank. It trades about -0.02 of its total potential returns per unit of risk. Meezan Bank is currently generating about 0.11 per unit of volatility. If you would invest 14,908 in Meezan Bank on September 4, 2024 and sell it today you would earn a total of 8,699 from holding Meezan Bank or generate 58.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matco Foods vs. Meezan Bank
Performance |
| Timeline |
| Matco Foods |
| Meezan Bank |
Matco Foods and Meezan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matco Foods and Meezan Bank
The main advantage of trading using opposite Matco Foods and Meezan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matco Foods position performs unexpectedly, Meezan Bank 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 Meezan Bank will offset losses from the drop in Meezan Bank's long position.| Matco Foods vs. Shaheen Insurance | Matco Foods vs. Meezan Bank | Matco Foods vs. TPL Insurance | Matco Foods vs. United Insurance |
| Meezan Bank vs. Matco Foods | Meezan Bank vs. Unilever Pakistan Foods | Meezan Bank vs. Shaheen Insurance | Meezan Bank vs. Allied 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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