Correlation Between Unilever Pakistan and MCB Investment
Can any of the company-specific risk be diversified away by investing in both Unilever Pakistan 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 Unilever Pakistan and MCB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever Pakistan Foods and MCB Investment Manag, you can compare the effects of market volatilities on Unilever Pakistan 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 Unilever Pakistan with a short position of MCB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever Pakistan and MCB Investment.
Diversification Opportunities for Unilever Pakistan and MCB Investment
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Unilever and MCB is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Pakistan Foods 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 Unilever Pakistan 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 Unilever Pakistan Foods 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 Unilever Pakistan i.e., Unilever Pakistan and MCB Investment go up and down completely randomly.
Pair Corralation between Unilever Pakistan and MCB Investment
Assuming the 90 days trading horizon Unilever Pakistan Foods is expected to generate 0.33 times more return on investment than MCB Investment. However, Unilever Pakistan Foods is 3.03 times less risky than MCB Investment. It trades about 0.21 of its potential returns per unit of risk. MCB Investment Manag is currently generating about 0.01 per unit of risk. If you would invest 2,100,001 in Unilever Pakistan Foods on October 25, 2024 and sell it today you would earn a total of 89,999 from holding Unilever Pakistan Foods or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever Pakistan Foods vs. MCB Investment Manag
Performance |
| Timeline |
| Unilever Pakistan Foods |
| MCB Investment Manag |
Unilever Pakistan and MCB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever Pakistan and MCB Investment
The main advantage of trading using opposite Unilever Pakistan and MCB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever Pakistan 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.| Unilever Pakistan vs. TPL Insurance | Unilever Pakistan vs. Allied Bank | Unilever Pakistan vs. Soneri Bank | Unilever Pakistan vs. Century 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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