Correlation Between Masood Textile and Pakistan State
Can any of the company-specific risk be diversified away by investing in both Masood Textile and Pakistan State 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 Pakistan State 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 Pakistan State Oil, you can compare the effects of market volatilities on Masood Textile and Pakistan State 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 Pakistan State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masood Textile and Pakistan State.
Diversification Opportunities for Masood Textile and Pakistan State
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Masood and Pakistan is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Masood Textile Mills and Pakistan State Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan State Oil 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 Pakistan State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan State Oil has no effect on the direction of Masood Textile i.e., Masood Textile and Pakistan State go up and down completely randomly.
Pair Corralation between Masood Textile and Pakistan State
Assuming the 90 days trading horizon Masood Textile is expected to generate 2.19 times less return on investment than Pakistan State. In addition to that, Masood Textile is 1.25 times more volatile than Pakistan State Oil. It trades about 0.12 of its total potential returns per unit of risk. Pakistan State Oil is currently generating about 0.33 per unit of volatility. If you would invest 23,054 in Pakistan State Oil on August 30, 2024 and sell it today you would earn a total of 5,533 from holding Pakistan State Oil or generate 24.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
Masood Textile Mills vs. Pakistan State Oil
Performance |
| Timeline |
| Masood Textile Mills |
| Pakistan State Oil |
Masood Textile and Pakistan State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masood Textile and Pakistan State
The main advantage of trading using opposite Masood Textile and Pakistan State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masood Textile position performs unexpectedly, Pakistan State 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 Pakistan State will offset losses from the drop in Pakistan State's long position.| Masood Textile vs. Fauji Foods | Masood Textile vs. KSB Pumps | Masood Textile vs. Mari Petroleum | Masood Textile vs. Loads |
| Pakistan State vs. Masood Textile Mills | Pakistan State vs. Fauji Foods | Pakistan State vs. KSB Pumps | Pakistan State 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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