Correlation Between Matco Foods and Murree Brewery
Can any of the company-specific risk be diversified away by investing in both Matco Foods and Murree Brewery 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 Murree Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matco Foods and Murree Brewery, you can compare the effects of market volatilities on Matco Foods and Murree Brewery 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 Murree Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matco Foods and Murree Brewery.
Diversification Opportunities for Matco Foods and Murree Brewery
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Matco and Murree is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Matco Foods and Murree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murree Brewery 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 Murree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murree Brewery has no effect on the direction of Matco Foods i.e., Matco Foods and Murree Brewery go up and down completely randomly.
Pair Corralation between Matco Foods and Murree Brewery
Assuming the 90 days trading horizon Matco Foods is expected to generate 1.45 times less return on investment than Murree Brewery. In addition to that, Matco Foods is 1.22 times more volatile than Murree Brewery. It trades about 0.06 of its total potential returns per unit of risk. Murree Brewery is currently generating about 0.1 per unit of volatility. If you would invest 30,731 in Murree Brewery on November 19, 2024 and sell it today you would earn a total of 49,239 from holding Murree Brewery or generate 160.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.64% |
| Values | Daily Returns |
Matco Foods vs. Murree Brewery
Performance |
| Timeline |
| Matco Foods |
| Murree Brewery |
Matco Foods and Murree Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matco Foods and Murree Brewery
The main advantage of trading using opposite Matco Foods and Murree Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matco Foods position performs unexpectedly, Murree Brewery 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 Murree Brewery will offset losses from the drop in Murree Brewery's long position.| Matco Foods vs. TPL Insurance | Matco Foods vs. Unity Foods | Matco Foods vs. National Bank of | Matco Foods vs. Universal Insurance |
| Murree Brewery vs. Air Link Communication | Murree Brewery vs. Mughal Iron Steel | Murree Brewery vs. WorldCall Telecom | Murree Brewery vs. Agha Steel Industries |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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