Correlation Between Masood Textile and Bestway Cement
Can any of the company-specific risk be diversified away by investing in both Masood Textile and Bestway Cement 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 Masood Textile and Bestway Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Masood Textile Mills and Bestway Cement, you can compare the effects of market volatilities on Masood Textile and Bestway Cement 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 Masood Textile with a short position of Bestway Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masood Textile and Bestway Cement.
Diversification Opportunities for Masood Textile and Bestway Cement
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Masood and Bestway is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Masood Textile Mills and Bestway Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bestway Cement and Masood Textile 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 Masood Textile Mills are associated (or correlated) with Bestway Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bestway Cement has no effect on the direction of Masood Textile i.e., Masood Textile and Bestway Cement go up and down completely randomly.
Pair Corralation between Masood Textile and Bestway Cement
Assuming the 90 days trading horizon Masood Textile Mills is expected to generate 4.6 times more return on investment than Bestway Cement. However, Masood Textile is 4.6 times more volatile than Bestway Cement. It trades about 0.11 of its potential returns per unit of risk. Bestway Cement is currently generating about 0.16 per unit of risk. If you would invest 5,151 in Masood Textile Mills on December 1, 2024 and sell it today you would earn a total of 404.00 from holding Masood Textile Mills or generate 7.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Masood Textile Mills vs. Bestway Cement
Performance |
| Timeline |
| Masood Textile Mills |
| Bestway Cement |
Masood Textile and Bestway Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masood Textile and Bestway Cement
The main advantage of trading using opposite Masood Textile and Bestway Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masood Textile position performs unexpectedly, Bestway Cement 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 Bestway Cement will offset losses from the drop in Bestway Cement's long position.| Masood Textile vs. Hi Tech Lubricants | Masood Textile vs. IBL HealthCare | Masood Textile vs. International Steels | Masood Textile vs. Askari General Insurance |
| Bestway Cement vs. Arpak International Investment | Bestway Cement vs. Fauji Foods | Bestway Cement vs. Pakistan Aluminium Beverage | Bestway Cement vs. ORIX Leasing Pakistan |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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