Correlation Between Matco Foods and Synthetic Products
Can any of the company-specific risk be diversified away by investing in both Matco Foods and Synthetic Products 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 Synthetic Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matco Foods and Synthetic Products Enterprises, you can compare the effects of market volatilities on Matco Foods and Synthetic Products 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 Synthetic Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matco Foods and Synthetic Products.
Diversification Opportunities for Matco Foods and Synthetic Products
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matco and Synthetic is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Matco Foods and Synthetic Products Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthetic Products 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 Synthetic Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synthetic Products has no effect on the direction of Matco Foods i.e., Matco Foods and Synthetic Products go up and down completely randomly.
Pair Corralation between Matco Foods and Synthetic Products
Assuming the 90 days trading horizon Matco Foods is expected to generate 9.07 times less return on investment than Synthetic Products. But when comparing it to its historical volatility, Matco Foods is 1.4 times less risky than Synthetic Products. It trades about 0.02 of its potential returns per unit of risk. Synthetic Products Enterprises is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,256 in Synthetic Products Enterprises on August 25, 2024 and sell it today you would earn a total of 2,550 from holding Synthetic Products Enterprises or generate 203.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.62% |
| Values | Daily Returns |
Matco Foods vs. Synthetic Products Enterprises
Performance |
| Timeline |
| Matco Foods |
| Synthetic Products |
Matco Foods and Synthetic Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matco Foods and Synthetic Products
The main advantage of trading using opposite Matco Foods and Synthetic Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matco Foods position performs unexpectedly, Synthetic Products 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 Synthetic Products will offset losses from the drop in Synthetic Products' long position.| Matco Foods vs. Masood Textile Mills | Matco Foods vs. Fauji Foods | Matco Foods vs. KSB Pumps | Matco Foods vs. Mari Petroleum |
| Synthetic Products vs. Matco Foods | Synthetic Products vs. Sitara Chemical Industries | Synthetic Products vs. Lotte Chemical Pakistan | Synthetic Products vs. Ghandhara Automobile |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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