Correlation Between Murree Brewery and Pakistan Synthetics
Can any of the company-specific risk be diversified away by investing in both Murree Brewery and Pakistan Synthetics 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 Pakistan Synthetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Murree Brewery and Pakistan Synthetics, you can compare the effects of market volatilities on Murree Brewery and Pakistan Synthetics 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 Pakistan Synthetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murree Brewery and Pakistan Synthetics.
Diversification Opportunities for Murree Brewery and Pakistan Synthetics
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Murree and Pakistan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Murree Brewery and Pakistan Synthetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Synthetics 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 Pakistan Synthetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Synthetics has no effect on the direction of Murree Brewery i.e., Murree Brewery and Pakistan Synthetics go up and down completely randomly.
Pair Corralation between Murree Brewery and Pakistan Synthetics
Assuming the 90 days trading horizon Murree Brewery is expected to generate 0.51 times more return on investment than Pakistan Synthetics. However, Murree Brewery is 1.97 times less risky than Pakistan Synthetics. It trades about 0.22 of its potential returns per unit of risk. Pakistan Synthetics is currently generating about 0.08 per unit of risk. If you would invest 29,138 in Murree Brewery on November 8, 2024 and sell it today you would earn a total of 49,863 from holding Murree Brewery or generate 171.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.94% |
| Values | Daily Returns |
Murree Brewery vs. Pakistan Synthetics
Performance |
| Timeline |
| Murree Brewery |
| Pakistan Synthetics |
Murree Brewery and Pakistan Synthetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Murree Brewery and Pakistan Synthetics
The main advantage of trading using opposite Murree Brewery and Pakistan Synthetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murree Brewery position performs unexpectedly, Pakistan Synthetics 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 Synthetics will offset losses from the drop in Pakistan Synthetics' long position.| Murree Brewery vs. United Insurance | Murree Brewery vs. EFU General Insurance | Murree Brewery vs. Beco Steel | Murree Brewery vs. National Bank of |
| Pakistan Synthetics vs. Sardar Chemical Industries | Pakistan Synthetics vs. Sitara Chemical Industries | Pakistan Synthetics vs. Lotte Chemical Pakistan | Pakistan Synthetics vs. Ghani Chemical Industries |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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