Correlation Between Metropolitan Steel and Masood Textile
Can any of the company-specific risk be diversified away by investing in both Metropolitan Steel 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 Metropolitan Steel and Masood Textile 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 Masood Textile Mills, you can compare the effects of market volatilities on Metropolitan Steel 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 Metropolitan Steel with a short position of Masood Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Steel and Masood Textile.
Diversification Opportunities for Metropolitan Steel and Masood Textile
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metropolitan and Masood is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Steel Corp 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 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 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 Metropolitan Steel i.e., Metropolitan Steel and Masood Textile go up and down completely randomly.
Pair Corralation between Metropolitan Steel and Masood Textile
Assuming the 90 days trading horizon Metropolitan Steel Corp is expected to under-perform the Masood Textile. In addition to that, Metropolitan Steel is 1.02 times more volatile than Masood Textile Mills. It trades about -0.02 of its total potential returns per unit of risk. Masood Textile Mills is currently generating about 0.27 per unit of volatility. If you would invest 4,981 in Masood Textile Mills on October 26, 2024 and sell it today you would earn a total of 673.00 from holding Masood Textile Mills or generate 13.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 75.0% |
| Values | Daily Returns |
Metropolitan Steel Corp vs. Masood Textile Mills
Performance |
| Timeline |
| Metropolitan Steel Corp |
| Masood Textile Mills |
Metropolitan Steel and Masood Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan Steel and Masood Textile
The main advantage of trading using opposite Metropolitan Steel and Masood Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Steel 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.| Metropolitan Steel vs. Masood Textile Mills | Metropolitan Steel vs. Fauji Foods | Metropolitan Steel vs. KSB Pumps | Metropolitan Steel vs. Mari Petroleum |
| Masood Textile vs. Unilever Pakistan Foods | Masood Textile vs. Atlas Insurance | Masood Textile vs. Shaheen Insurance | Masood Textile vs. Century Insurance |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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