Correlation Between Masood Textile and MCB Bank
Can any of the company-specific risk be diversified away by investing in both Masood Textile and MCB Bank 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 MCB Bank 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 MCB Bank, you can compare the effects of market volatilities on Masood Textile and MCB Bank 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 MCB Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masood Textile and MCB Bank.
Diversification Opportunities for Masood Textile and MCB Bank
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Masood and MCB is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Masood Textile Mills and MCB Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB Bank 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 MCB Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB Bank has no effect on the direction of Masood Textile i.e., Masood Textile and MCB Bank go up and down completely randomly.
Pair Corralation between Masood Textile and MCB Bank
Assuming the 90 days trading horizon Masood Textile is expected to generate 2.36 times less return on investment than MCB Bank. In addition to that, Masood Textile is 2.23 times more volatile than MCB Bank. It trades about 0.03 of its total potential returns per unit of risk. MCB Bank is currently generating about 0.18 per unit of volatility. If you would invest 12,130 in MCB Bank on September 1, 2024 and sell it today you would earn a total of 14,996 from holding MCB Bank or generate 123.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 58.78% |
| Values | Daily Returns |
Masood Textile Mills vs. MCB Bank
Performance |
| Timeline |
| Masood Textile Mills |
| MCB Bank |
Masood Textile and MCB Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masood Textile and MCB Bank
The main advantage of trading using opposite Masood Textile and MCB Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masood Textile position performs unexpectedly, MCB Bank 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 MCB Bank will offset losses from the drop in MCB Bank's long position.| Masood Textile vs. Fauji Foods | Masood Textile vs. KSB Pumps | Masood Textile vs. Mari Petroleum | Masood Textile vs. Loads |
| MCB Bank vs. Oil and Gas | MCB Bank vs. Pakistan State Oil | MCB Bank vs. Pakistan Petroleum | MCB Bank vs. Fauji Fertilizer |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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