Correlation Between Metropolitan Steel and Adamjee Insurance
Can any of the company-specific risk be diversified away by investing in both Metropolitan Steel and Adamjee Insurance 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 Metropolitan Steel and Adamjee Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan Steel Corp and Adamjee Insurance, you can compare the effects of market volatilities on Metropolitan Steel and Adamjee Insurance 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 Metropolitan Steel with a short position of Adamjee Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Steel and Adamjee Insurance.
Diversification Opportunities for Metropolitan Steel and Adamjee Insurance
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Metropolitan and Adamjee is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Steel Corp and Adamjee Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamjee Insurance and Metropolitan Steel 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 Metropolitan Steel Corp are associated (or correlated) with Adamjee Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adamjee Insurance has no effect on the direction of Metropolitan Steel i.e., Metropolitan Steel and Adamjee Insurance go up and down completely randomly.
Pair Corralation between Metropolitan Steel and Adamjee Insurance
Assuming the 90 days trading horizon Metropolitan Steel Corp is expected to under-perform the Adamjee Insurance. In addition to that, Metropolitan Steel is 1.17 times more volatile than Adamjee Insurance. It trades about -0.05 of its total potential returns per unit of risk. Adamjee Insurance is currently generating about 0.0 per unit of volatility. If you would invest 5,023 in Adamjee Insurance on October 29, 2024 and sell it today you would lose (39.00) from holding Adamjee Insurance or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan Steel Corp vs. Adamjee Insurance
Performance |
| Timeline |
| Metropolitan Steel Corp |
| Adamjee Insurance |
Metropolitan Steel and Adamjee Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan Steel and Adamjee Insurance
The main advantage of trading using opposite Metropolitan Steel and Adamjee Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Steel position performs unexpectedly, Adamjee Insurance 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 Adamjee Insurance will offset losses from the drop in Adamjee Insurance's long position.| Metropolitan Steel vs. JS Bank | Metropolitan Steel vs. Apna Microfinance Bank | Metropolitan Steel vs. TPL Insurance | Metropolitan Steel vs. Shaheen Insurance |
| Adamjee Insurance vs. Ghani Chemical Industries | Adamjee Insurance vs. Pakistan Synthetics | Adamjee Insurance vs. Engro Polymer Chemicals | Adamjee Insurance vs. Synthetic Products Enterprises |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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