Correlation Between Thatta Cement and Mari Petroleum
Can any of the company-specific risk be diversified away by investing in both Thatta Cement and Mari Petroleum 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 Thatta Cement and Mari Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thatta Cement and Mari Petroleum, you can compare the effects of market volatilities on Thatta Cement and Mari Petroleum 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 Thatta Cement with a short position of Mari Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thatta Cement and Mari Petroleum.
Diversification Opportunities for Thatta Cement and Mari Petroleum
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thatta and Mari is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Thatta Cement and Mari Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mari Petroleum and Thatta Cement 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 Thatta Cement are associated (or correlated) with Mari Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mari Petroleum has no effect on the direction of Thatta Cement i.e., Thatta Cement and Mari Petroleum go up and down completely randomly.
Pair Corralation between Thatta Cement and Mari Petroleum
Assuming the 90 days trading horizon Thatta Cement is expected to generate 1.59 times more return on investment than Mari Petroleum. However, Thatta Cement is 1.59 times more volatile than Mari Petroleum. It trades about 0.07 of its potential returns per unit of risk. Mari Petroleum is currently generating about -0.02 per unit of risk. If you would invest 20,340 in Thatta Cement on October 21, 2024 and sell it today you would earn a total of 798.00 from holding Thatta Cement or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thatta Cement vs. Mari Petroleum
Performance |
| Timeline |
| Thatta Cement |
| Mari Petroleum |
Thatta Cement and Mari Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thatta Cement and Mari Petroleum
The main advantage of trading using opposite Thatta Cement and Mari Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thatta Cement position performs unexpectedly, Mari Petroleum 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 Mari Petroleum will offset losses from the drop in Mari Petroleum's long position.| Thatta Cement vs. Oil and Gas | Thatta Cement vs. Pakistan State Oil | Thatta Cement vs. Pakistan Petroleum | Thatta Cement vs. Lucky Cement |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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