Correlation Between Pakistan Telecommunicatio and MCB Investment
Can any of the company-specific risk be diversified away by investing in both Pakistan Telecommunicatio and MCB Investment 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 Telecommunicatio and MCB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Telecommunication and MCB Investment Manag, you can compare the effects of market volatilities on Pakistan Telecommunicatio and MCB Investment 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 Telecommunicatio with a short position of MCB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Telecommunicatio and MCB Investment.
Diversification Opportunities for Pakistan Telecommunicatio and MCB Investment
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pakistan and MCB is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Telecommunication and MCB Investment Manag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB Investment Manag and Pakistan Telecommunicatio 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 Telecommunication are associated (or correlated) with MCB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB Investment Manag has no effect on the direction of Pakistan Telecommunicatio i.e., Pakistan Telecommunicatio and MCB Investment go up and down completely randomly.
Pair Corralation between Pakistan Telecommunicatio and MCB Investment
Assuming the 90 days trading horizon Pakistan Telecommunicatio is expected to generate 2.02 times less return on investment than MCB Investment. In addition to that, Pakistan Telecommunicatio is 1.07 times more volatile than MCB Investment Manag. It trades about 0.2 of its total potential returns per unit of risk. MCB Investment Manag is currently generating about 0.43 per unit of volatility. If you would invest 3,950 in MCB Investment Manag on August 30, 2024 and sell it today you would earn a total of 1,670 from holding MCB Investment Manag or generate 42.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Telecommunication vs. MCB Investment Manag
Performance |
| Timeline |
| Pakistan Telecommunicatio |
| MCB Investment Manag |
Pakistan Telecommunicatio and MCB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Telecommunicatio and MCB Investment
The main advantage of trading using opposite Pakistan Telecommunicatio and MCB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Telecommunicatio position performs unexpectedly, MCB Investment 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 MCB Investment will offset losses from the drop in MCB Investment's long position.| Pakistan Telecommunicatio vs. Habib Bank | Pakistan Telecommunicatio vs. National Bank of | Pakistan Telecommunicatio vs. United Bank | Pakistan Telecommunicatio vs. MCB Bank |
| MCB Investment vs. Habib Insurance | MCB Investment vs. Century Insurance | MCB Investment vs. Reliance Weaving Mills | MCB Investment 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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |