Correlation Between Murree Brewery and Faysal Bank
Can any of the company-specific risk be diversified away by investing in both Murree Brewery and Faysal 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 Murree Brewery and Faysal Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Murree Brewery and Faysal Bank, you can compare the effects of market volatilities on Murree Brewery and Faysal 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 Murree Brewery with a short position of Faysal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murree Brewery and Faysal Bank.
Diversification Opportunities for Murree Brewery and Faysal Bank
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Murree and Faysal is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Murree Brewery and Faysal Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faysal Bank and Murree Brewery 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 Murree Brewery are associated (or correlated) with Faysal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faysal Bank has no effect on the direction of Murree Brewery i.e., Murree Brewery and Faysal Bank go up and down completely randomly.
Pair Corralation between Murree Brewery and Faysal Bank
Assuming the 90 days trading horizon Murree Brewery is expected to generate 1.07 times less return on investment than Faysal Bank. But when comparing it to its historical volatility, Murree Brewery is 1.07 times less risky than Faysal Bank. It trades about 0.14 of its potential returns per unit of risk. Faysal Bank is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,644 in Faysal Bank on September 4, 2024 and sell it today you would earn a total of 3,178 from holding Faysal Bank or generate 193.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.07% |
| Values | Daily Returns |
Murree Brewery vs. Faysal Bank
Performance |
| Timeline |
| Murree Brewery |
| Faysal Bank |
Murree Brewery and Faysal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Murree Brewery and Faysal Bank
The main advantage of trading using opposite Murree Brewery and Faysal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murree Brewery position performs unexpectedly, Faysal 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 Faysal Bank will offset losses from the drop in Faysal Bank's long position.| Murree Brewery vs. Habib Insurance | Murree Brewery vs. Pakistan Refinery | Murree Brewery vs. Century Insurance | Murree Brewery vs. Reliance Weaving Mills |
| Faysal Bank vs. Big Bird Foods | Faysal Bank vs. First Credit And | Faysal Bank vs. Hi Tech Lubricants | Faysal Bank vs. National Bank of |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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