Correlation Between Masood Textile and Grays Leasing
Can any of the company-specific risk be diversified away by investing in both Masood Textile and Grays Leasing 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 Grays Leasing 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 Grays Leasing, you can compare the effects of market volatilities on Masood Textile and Grays Leasing 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 Grays Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masood Textile and Grays Leasing.
Diversification Opportunities for Masood Textile and Grays Leasing
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Masood and Grays is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Masood Textile Mills and Grays Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grays Leasing 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 Grays Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grays Leasing has no effect on the direction of Masood Textile i.e., Masood Textile and Grays Leasing go up and down completely randomly.
Pair Corralation between Masood Textile and Grays Leasing
Assuming the 90 days trading horizon Masood Textile Mills is expected to under-perform the Grays Leasing. In addition to that, Masood Textile is 1.39 times more volatile than Grays Leasing. It trades about -0.2 of its total potential returns per unit of risk. Grays Leasing is currently generating about -0.02 per unit of volatility. If you would invest 490.00 in Grays Leasing on August 26, 2024 and sell it today you would lose (19.00) from holding Grays Leasing or give up 3.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.0% |
| Values | Daily Returns |
Masood Textile Mills vs. Grays Leasing
Performance |
| Timeline |
| Masood Textile Mills |
| Grays Leasing |
Masood Textile and Grays Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masood Textile and Grays Leasing
The main advantage of trading using opposite Masood Textile and Grays Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masood Textile position performs unexpectedly, Grays Leasing 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 Grays Leasing will offset losses from the drop in Grays Leasing's long position.| Masood Textile vs. Ittehad Chemicals | Masood Textile vs. Engro Polymer Chemicals | Masood Textile vs. Lotte Chemical Pakistan | Masood Textile vs. Pak Gulf Leasing |
| Grays Leasing vs. Masood Textile Mills | Grays Leasing vs. Fauji Foods | Grays Leasing vs. KSB Pumps | Grays Leasing vs. Mari Petroleum |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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