Correlation Between Packages and Masood Textile
Can any of the company-specific risk be diversified away by investing in both Packages and Masood Textile 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 Packages and Masood Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Packages and Masood Textile Mills, you can compare the effects of market volatilities on Packages and Masood Textile 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 Packages with a short position of Masood Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Packages and Masood Textile.
Diversification Opportunities for Packages and Masood Textile
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Packages and Masood is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Packages and Masood Textile Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masood Textile Mills and Packages 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 Packages are associated (or correlated) with Masood Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masood Textile Mills has no effect on the direction of Packages i.e., Packages and Masood Textile go up and down completely randomly.
Pair Corralation between Packages and Masood Textile
Assuming the 90 days trading horizon Packages is expected to generate 1.14 times less return on investment than Masood Textile. But when comparing it to its historical volatility, Packages is 2.16 times less risky than Masood Textile. It trades about 0.07 of its potential returns per unit of risk. Masood Textile Mills is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,105 in Masood Textile Mills on August 29, 2024 and sell it today you would earn a total of 695.00 from holding Masood Textile Mills or generate 16.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 53.52% |
| Values | Daily Returns |
Packages vs. Masood Textile Mills
Performance |
| Timeline |
| Packages |
| Masood Textile Mills |
Packages and Masood Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Packages and Masood Textile
The main advantage of trading using opposite Packages and Masood Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Packages position performs unexpectedly, Masood Textile 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 Masood Textile will offset losses from the drop in Masood Textile's long position.| Packages vs. Unilever Pakistan Foods | Packages vs. Pakistan Aluminium Beverage | Packages vs. National Foods | Packages vs. Big Bird Foods |
| Masood Textile vs. National Foods | Masood Textile vs. Engro Polymer Chemicals | Masood Textile vs. Data Agro | Masood Textile vs. Adamjee Insurance |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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