Correlation Between Masood Textile and National Refinery
Can any of the company-specific risk be diversified away by investing in both Masood Textile and National Refinery 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 National Refinery 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 National Refinery, you can compare the effects of market volatilities on Masood Textile and National Refinery 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 National Refinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masood Textile and National Refinery.
Diversification Opportunities for Masood Textile and National Refinery
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Masood and National is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Masood Textile Mills and National Refinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Refinery 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 National Refinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Refinery has no effect on the direction of Masood Textile i.e., Masood Textile and National Refinery go up and down completely randomly.
Pair Corralation between Masood Textile and National Refinery
Assuming the 90 days trading horizon Masood Textile Mills is expected to generate 1.5 times more return on investment than National Refinery. However, Masood Textile is 1.5 times more volatile than National Refinery. It trades about 0.03 of its potential returns per unit of risk. National Refinery is currently generating about 0.03 per unit of risk. If you would invest 4,508 in Masood Textile Mills on September 12, 2024 and sell it today you would earn a total of 332.00 from holding Masood Textile Mills or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 56.85% |
| Values | Daily Returns |
Masood Textile Mills vs. National Refinery
Performance |
| Timeline |
| Masood Textile Mills |
| National Refinery |
Masood Textile and National Refinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masood Textile and National Refinery
The main advantage of trading using opposite Masood Textile and National Refinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masood Textile position performs unexpectedly, National Refinery 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 National Refinery will offset losses from the drop in National Refinery's long position.| Masood Textile vs. Fauji Foods | Masood Textile vs. KSB Pumps | Masood Textile vs. Mari Petroleum | Masood Textile vs. Loads |
| National Refinery vs. Unilever Pakistan Foods | National Refinery vs. Hi Tech Lubricants | National Refinery vs. Ghani Chemical Industries | National Refinery vs. WorldCall Telecom |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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