Correlation Between Wah Nobel and Murree Brewery
Can any of the company-specific risk be diversified away by investing in both Wah Nobel and Murree Brewery 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 Wah Nobel and Murree Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wah Nobel Chemicals and Murree Brewery, you can compare the effects of market volatilities on Wah Nobel and Murree Brewery 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 Wah Nobel with a short position of Murree Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Nobel and Murree Brewery.
Diversification Opportunities for Wah Nobel and Murree Brewery
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wah and Murree is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Wah Nobel Chemicals and Murree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murree Brewery and Wah Nobel 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 Wah Nobel Chemicals are associated (or correlated) with Murree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murree Brewery has no effect on the direction of Wah Nobel i.e., Wah Nobel and Murree Brewery go up and down completely randomly.
Pair Corralation between Wah Nobel and Murree Brewery
Assuming the 90 days trading horizon Wah Nobel is expected to generate 1.89 times less return on investment than Murree Brewery. In addition to that, Wah Nobel is 1.17 times more volatile than Murree Brewery. It trades about 0.05 of its total potential returns per unit of risk. Murree Brewery is currently generating about 0.1 per unit of volatility. If you would invest 30,565 in Murree Brewery on November 1, 2024 and sell it today you would earn a total of 49,260 from holding Murree Brewery or generate 161.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 88.72% |
| Values | Daily Returns |
Wah Nobel Chemicals vs. Murree Brewery
Performance |
| Timeline |
| Wah Nobel Chemicals |
| Murree Brewery |
Wah Nobel and Murree Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wah Nobel and Murree Brewery
The main advantage of trading using opposite Wah Nobel and Murree Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Nobel position performs unexpectedly, Murree Brewery 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 Murree Brewery will offset losses from the drop in Murree Brewery's long position.| Wah Nobel vs. Bawany Air Products | Wah Nobel vs. East West Insurance | Wah Nobel vs. Pakistan Reinsurance | Wah Nobel vs. Jubilee Life Insurance |
| Murree Brewery vs. Ghani Chemical Industries | Murree Brewery vs. JS Investments | Murree Brewery vs. MCB Bank | Murree Brewery vs. Ittehad Chemicals |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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