Correlation Between Pakistan Aluminium and Matco Foods
Can any of the company-specific risk be diversified away by investing in both Pakistan Aluminium and Matco 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 Pakistan Aluminium and Matco Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Aluminium Beverage and Matco Foods, you can compare the effects of market volatilities on Pakistan Aluminium and Matco 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 Pakistan Aluminium with a short position of Matco Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Aluminium and Matco Foods.
Diversification Opportunities for Pakistan Aluminium and Matco Foods
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pakistan and Matco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Aluminium Beverage and Matco Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matco Foods and Pakistan Aluminium 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 Pakistan Aluminium Beverage are associated (or correlated) with Matco Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matco Foods has no effect on the direction of Pakistan Aluminium i.e., Pakistan Aluminium and Matco Foods go up and down completely randomly.
Pair Corralation between Pakistan Aluminium and Matco Foods
Assuming the 90 days trading horizon Pakistan Aluminium Beverage is expected to under-perform the Matco Foods. But the stock apears to be less risky and, when comparing its historical volatility, Pakistan Aluminium Beverage is 1.93 times less risky than Matco Foods. The stock trades about -0.2 of its potential returns per unit of risk. The Matco Foods is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,782 in Matco Foods on November 4, 2024 and sell it today you would earn a total of 124.00 from holding Matco Foods or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Aluminium Beverage vs. Matco Foods
Performance |
| Timeline |
| Pakistan Aluminium |
| Matco Foods |
Pakistan Aluminium and Matco Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Aluminium and Matco Foods
The main advantage of trading using opposite Pakistan Aluminium and Matco Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Aluminium position performs unexpectedly, Matco 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 Matco Foods will offset losses from the drop in Matco Foods' long position.| Pakistan Aluminium vs. Apna Microfinance Bank | Pakistan Aluminium vs. EFU General Insurance | Pakistan Aluminium vs. Pakistan Reinsurance | Pakistan Aluminium vs. Universal Insurance |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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