Correlation Between Pakistan Tobacco and Murree Brewery
Can any of the company-specific risk be diversified away by investing in both Pakistan Tobacco and Murree Brewery 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 Tobacco and Murree Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Tobacco and Murree Brewery, you can compare the effects of market volatilities on Pakistan Tobacco and Murree Brewery 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 Tobacco with a short position of Murree Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Tobacco and Murree Brewery.
Diversification Opportunities for Pakistan Tobacco and Murree Brewery
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pakistan and Murree is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Tobacco and Murree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murree Brewery and Pakistan Tobacco 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 Tobacco are associated (or correlated) with Murree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murree Brewery has no effect on the direction of Pakistan Tobacco i.e., Pakistan Tobacco and Murree Brewery go up and down completely randomly.
Pair Corralation between Pakistan Tobacco and Murree Brewery
Assuming the 90 days trading horizon Pakistan Tobacco is expected to under-perform the Murree Brewery. But the stock apears to be less risky and, when comparing its historical volatility, Pakistan Tobacco is 1.21 times less risky than Murree Brewery. The stock trades about -0.18 of its potential returns per unit of risk. The Murree Brewery is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 59,745 in Murree Brewery on August 28, 2024 and sell it today you would earn a total of 4,525 from holding Murree Brewery or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Tobacco vs. Murree Brewery
Performance |
| Timeline |
| Pakistan Tobacco |
| Murree Brewery |
Pakistan Tobacco and Murree Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Tobacco and Murree Brewery
The main advantage of trading using opposite Pakistan Tobacco and Murree Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Tobacco position performs unexpectedly, Murree Brewery 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 Murree Brewery will offset losses from the drop in Murree Brewery's long position.| Pakistan Tobacco vs. Masood Textile Mills | Pakistan Tobacco vs. Fauji Foods | Pakistan Tobacco vs. KSB Pumps | Pakistan Tobacco vs. Mari Petroleum |
| Murree Brewery vs. Habib Insurance | Murree Brewery vs. Century Insurance | Murree Brewery vs. Reliance Weaving Mills | Murree Brewery vs. Media Times |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |