Correlation Between Murree Brewery and Unity Foods
Can any of the company-specific risk be diversified away by investing in both Murree Brewery and Unity 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 Unity 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 Unity Foods, you can compare the effects of market volatilities on Murree Brewery and Unity 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 Unity Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Murree Brewery and Unity Foods.
Diversification Opportunities for Murree Brewery and Unity Foods
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Murree and Unity is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Murree Brewery and Unity Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity 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 Unity Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Foods has no effect on the direction of Murree Brewery i.e., Murree Brewery and Unity Foods go up and down completely randomly.
Pair Corralation between Murree Brewery and Unity Foods
Assuming the 90 days trading horizon Murree Brewery is expected to generate 0.78 times more return on investment than Unity Foods. However, Murree Brewery is 1.28 times less risky than Unity Foods. It trades about 0.13 of its potential returns per unit of risk. Unity Foods is currently generating about -0.39 per unit of risk. If you would invest 78,255 in Murree Brewery on November 5, 2024 and sell it today you would earn a total of 2,260 from holding Murree Brewery or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Murree Brewery vs. Unity Foods
Performance |
| Timeline |
| Murree Brewery |
| Unity Foods |
Murree Brewery and Unity Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Murree Brewery and Unity Foods
The main advantage of trading using opposite Murree Brewery and Unity Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Murree Brewery position performs unexpectedly, Unity 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 Unity Foods will offset losses from the drop in Unity Foods' long position.| Murree Brewery vs. Avanceon | Murree Brewery vs. EFU General Insurance | Murree Brewery vs. Universal Insurance | Murree Brewery vs. Agha Steel Industries |
| Unity Foods vs. Shaheen Insurance | Unity Foods vs. Nimir Industrial Chemical | Unity Foods vs. Jubilee Life Insurance | Unity Foods vs. MCB Bank |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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