Correlation Between 786 Investment and Aisha Steel
Can any of the company-specific risk be diversified away by investing in both 786 Investment and Aisha 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 786 Investment and Aisha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 786 Investment Limited and Aisha Steel Mills, you can compare the effects of market volatilities on 786 Investment and Aisha 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 786 Investment with a short position of Aisha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of 786 Investment and Aisha Steel.
Diversification Opportunities for 786 Investment and Aisha Steel
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 786 and Aisha is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding 786 Investment Limited and Aisha Steel Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aisha Steel Mills and 786 Investment 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 786 Investment Limited are associated (or correlated) with Aisha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aisha Steel Mills has no effect on the direction of 786 Investment i.e., 786 Investment and Aisha Steel go up and down completely randomly.
Pair Corralation between 786 Investment and Aisha Steel
Assuming the 90 days trading horizon 786 Investment Limited is expected to generate 1.68 times more return on investment than Aisha Steel. However, 786 Investment is 1.68 times more volatile than Aisha Steel Mills. It trades about 0.06 of its potential returns per unit of risk. Aisha Steel Mills is currently generating about 0.05 per unit of risk. If you would invest 500.00 in 786 Investment Limited on November 19, 2024 and sell it today you would earn a total of 428.00 from holding 786 Investment Limited or generate 85.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 75.52% |
| Values | Daily Returns |
786 Investment Limited vs. Aisha Steel Mills
Performance |
| Timeline |
| 786 Investment |
| Aisha Steel Mills |
786 Investment and Aisha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 786 Investment and Aisha Steel
The main advantage of trading using opposite 786 Investment and Aisha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 786 Investment position performs unexpectedly, Aisha 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 Aisha Steel will offset losses from the drop in Aisha Steel's long position.| 786 Investment vs. Universal Insurance | 786 Investment vs. Adamjee Insurance | 786 Investment vs. Synthetic Products Enterprises | 786 Investment vs. Habib Insurance |
| Aisha Steel vs. Air Link Communication | Aisha Steel vs. Atlas Insurance | Aisha Steel vs. TPL Insurance | Aisha Steel vs. Universal Insurance |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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