Correlation Between 786 Investment and Bank Alfalah
Can any of the company-specific risk be diversified away by investing in both 786 Investment and Bank Alfalah 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 Bank Alfalah 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 Bank Alfalah, you can compare the effects of market volatilities on 786 Investment and Bank Alfalah 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 Bank Alfalah. Check out your portfolio center. Please also check ongoing floating volatility patterns of 786 Investment and Bank Alfalah.
Diversification Opportunities for 786 Investment and Bank Alfalah
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 786 and Bank is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding 786 Investment Limited and Bank Alfalah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Alfalah 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 Bank Alfalah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Alfalah has no effect on the direction of 786 Investment i.e., 786 Investment and Bank Alfalah go up and down completely randomly.
Pair Corralation between 786 Investment and Bank Alfalah
Assuming the 90 days trading horizon 786 Investment is expected to generate 1.27 times less return on investment than Bank Alfalah. In addition to that, 786 Investment is 2.01 times more volatile than Bank Alfalah. It trades about 0.05 of its total potential returns per unit of risk. Bank Alfalah is currently generating about 0.14 per unit of volatility. If you would invest 3,323 in Bank Alfalah on September 12, 2024 and sell it today you would earn a total of 4,529 from holding Bank Alfalah or generate 136.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.11% |
| Values | Daily Returns |
786 Investment Limited vs. Bank Alfalah
Performance |
| Timeline |
| 786 Investment |
| Bank Alfalah |
786 Investment and Bank Alfalah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 786 Investment and Bank Alfalah
The main advantage of trading using opposite 786 Investment and Bank Alfalah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 786 Investment position performs unexpectedly, Bank Alfalah 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 Bank Alfalah will offset losses from the drop in Bank Alfalah's long position.| 786 Investment vs. Habib Insurance | 786 Investment vs. Ghandhara Automobile | 786 Investment vs. Century Insurance | 786 Investment vs. Reliance Weaving Mills |
| Bank Alfalah vs. Wah Nobel Chemicals | Bank Alfalah vs. Matco Foods | Bank Alfalah vs. 786 Investment Limited | Bank Alfalah vs. Agha Steel Industries |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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