Correlation Between Masood Textile and Packages
Can any of the company-specific risk be diversified away by investing in both Masood Textile and Packages 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 Packages 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 Packages, you can compare the effects of market volatilities on Masood Textile and Packages 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 Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masood Textile and Packages.
Diversification Opportunities for Masood Textile and Packages
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Masood and Packages is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Masood Textile Mills and Packages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packages 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 Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packages has no effect on the direction of Masood Textile i.e., Masood Textile and Packages go up and down completely randomly.
Pair Corralation between Masood Textile and Packages
Assuming the 90 days trading horizon Masood Textile Mills is expected to generate 2.16 times more return on investment than Packages. However, Masood Textile is 2.16 times more volatile than Packages. It trades about 0.04 of its potential returns per unit of risk. Packages is currently generating about 0.07 per unit of risk. If you would invest 4,105 in Masood Textile Mills on August 29, 2024 and sell it today you would earn a total of 695.00 from holding Masood Textile Mills or generate 16.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 53.52% |
| Values | Daily Returns |
Masood Textile Mills vs. Packages
Performance |
| Timeline |
| Masood Textile Mills |
| Packages |
Masood Textile and Packages Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masood Textile and Packages
The main advantage of trading using opposite Masood Textile and Packages positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masood Textile position performs unexpectedly, Packages 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 Packages will offset losses from the drop in Packages' long position.| Masood Textile vs. National Foods | Masood Textile vs. Engro Polymer Chemicals | Masood Textile vs. Data Agro | Masood Textile vs. Adamjee Insurance |
| Packages vs. Unilever Pakistan Foods | Packages vs. Pakistan Aluminium Beverage | Packages vs. National Foods | Packages vs. Big Bird Foods |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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