Correlation Between Mughal Iron and National Foods
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By analyzing existing cross correlation between Mughal Iron Steel and National Foods, you can compare the effects of market volatilities on Mughal Iron and National Foods 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 Mughal Iron with a short position of National Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mughal Iron and National Foods.
Diversification Opportunities for Mughal Iron and National Foods
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Mughal and National is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mughal Iron Steel and National Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Foods and Mughal Iron 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 Mughal Iron Steel are associated (or correlated) with National Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Foods has no effect on the direction of Mughal Iron i.e., Mughal Iron and National Foods go up and down completely randomly.
Pair Corralation between Mughal Iron and National Foods
Assuming the 90 days trading horizon Mughal Iron Steel is expected to under-perform the National Foods. In addition to that, Mughal Iron is 2.4 times more volatile than National Foods. It trades about -0.24 of its total potential returns per unit of risk. National Foods is currently generating about 0.13 per unit of volatility. If you would invest 16,814 in National Foods on August 26, 2024 and sell it today you would earn a total of 564.00 from holding National Foods or generate 3.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Mughal Iron Steel vs. National Foods
Performance |
Timeline |
Mughal Iron Steel |
National Foods |
Mughal Iron and National Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mughal Iron and National Foods
The main advantage of trading using opposite Mughal Iron and National Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mughal Iron position performs unexpectedly, National Foods 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 Foods will offset losses from the drop in National Foods' long position.Mughal Iron vs. Oil and Gas | Mughal Iron vs. Pakistan State Oil | Mughal Iron vs. Pakistan Petroleum | Mughal Iron vs. Engro |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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