Correlation Between Matco Foods and Masood Textile
Can any of the company-specific risk be diversified away by investing in both Matco Foods and Masood Textile 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 Masood Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matco Foods and Masood Textile Mills, you can compare the effects of market volatilities on Matco Foods and Masood Textile 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 Masood Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matco Foods and Masood Textile.
Diversification Opportunities for Matco Foods and Masood Textile
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Matco and Masood is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Matco Foods and Masood Textile Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masood Textile Mills 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 Masood Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masood Textile Mills has no effect on the direction of Matco Foods i.e., Matco Foods and Masood Textile go up and down completely randomly.
Pair Corralation between Matco Foods and Masood Textile
Assuming the 90 days trading horizon Matco Foods is expected to generate 0.67 times more return on investment than Masood Textile. However, Matco Foods is 1.48 times less risky than Masood Textile. It trades about 0.02 of its potential returns per unit of risk. Masood Textile Mills is currently generating about 0.0 per unit of risk. If you would invest 2,800 in Matco Foods on August 25, 2024 and sell it today you would earn a total of 132.00 from holding Matco Foods or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 58.17% |
| Values | Daily Returns |
Matco Foods vs. Masood Textile Mills
Performance |
| Timeline |
| Matco Foods |
| Masood Textile Mills |
Matco Foods and Masood Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matco Foods and Masood Textile
The main advantage of trading using opposite Matco Foods and Masood Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matco Foods position performs unexpectedly, Masood Textile 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 Masood Textile will offset losses from the drop in Masood Textile's long position.| Matco Foods vs. Masood Textile Mills | Matco Foods vs. Fauji Foods | Matco Foods vs. KSB Pumps | Matco Foods vs. Mari Petroleum |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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