Correlation Between Murree Brewery and National Foods
Can any of the company-specific risk be diversified away by investing in both Murree Brewery and National Foods 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 National Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Murree Brewery and National Foods, you can compare the effects of market volatilities on Murree Brewery 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 Murree Brewery with a short position of National Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murree Brewery and National Foods.
Diversification Opportunities for Murree Brewery and National Foods
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Murree and National is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Murree Brewery and National Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Foods 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 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 Murree Brewery i.e., Murree Brewery and National Foods go up and down completely randomly.
Pair Corralation between Murree Brewery and National Foods
Assuming the 90 days trading horizon Murree Brewery is expected to generate 1.52 times more return on investment than National Foods. However, Murree Brewery is 1.52 times more volatile than National Foods. It trades about 0.35 of its potential returns per unit of risk. National Foods is currently generating about 0.15 per unit of risk. If you would invest 58,814 in Murree Brewery on August 25, 2024 and sell it today you would earn a total of 8,570 from holding Murree Brewery or generate 14.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Murree Brewery vs. National Foods
Performance |
| Timeline |
| Murree Brewery |
| National Foods |
Murree Brewery and National Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Murree Brewery and National Foods
The main advantage of trading using opposite Murree Brewery and National Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murree Brewery 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.| Murree Brewery vs. Habib Insurance | Murree Brewery vs. Ghandhara Automobile | Murree Brewery vs. Century Insurance | Murree Brewery vs. Reliance Weaving Mills |
| National Foods vs. Masood Textile Mills | National Foods vs. Fauji Foods | National Foods vs. KSB Pumps | National Foods 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 CEOs Directory module to screen CEOs from public companies around the world.
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