Correlation Between Unilever Pakistan and Metropolitan Steel
Can any of the company-specific risk be diversified away by investing in both Unilever Pakistan and Metropolitan Steel 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 Metropolitan Steel 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 Metropolitan Steel Corp, you can compare the effects of market volatilities on Unilever Pakistan and Metropolitan Steel 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 Metropolitan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever Pakistan and Metropolitan Steel.
Diversification Opportunities for Unilever Pakistan and Metropolitan Steel
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Unilever and Metropolitan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Pakistan Foods and Metropolitan Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Steel Corp 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 Metropolitan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Steel Corp has no effect on the direction of Unilever Pakistan i.e., Unilever Pakistan and Metropolitan Steel go up and down completely randomly.
Pair Corralation between Unilever Pakistan and Metropolitan Steel
Assuming the 90 days trading horizon Unilever Pakistan Foods is expected to generate 0.57 times more return on investment than Metropolitan Steel. However, Unilever Pakistan Foods is 1.75 times less risky than Metropolitan Steel. It trades about 0.29 of its potential returns per unit of risk. Metropolitan Steel Corp is currently generating about -0.33 per unit of risk. If you would invest 2,099,231 in Unilever Pakistan Foods on November 4, 2024 and sell it today you would earn a total of 131,319 from holding Unilever Pakistan Foods or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever Pakistan Foods vs. Metropolitan Steel Corp
Performance |
| Timeline |
| Unilever Pakistan Foods |
| Metropolitan Steel Corp |
Unilever Pakistan and Metropolitan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever Pakistan and Metropolitan Steel
The main advantage of trading using opposite Unilever Pakistan and Metropolitan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever Pakistan position performs unexpectedly, Metropolitan Steel 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 Metropolitan Steel will offset losses from the drop in Metropolitan Steel's long position.| Unilever Pakistan vs. Habib Insurance | Unilever Pakistan vs. National Bank of | Unilever Pakistan vs. Adamjee Insurance | Unilever Pakistan vs. Murree Brewery |
| Metropolitan Steel vs. Air Link Communication | Metropolitan Steel vs. Unilever Pakistan Foods | Metropolitan Steel vs. Pakistan Telecommunication | Metropolitan Steel vs. Bawany Air Products |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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