Correlation Between 786 Investment and KSB Pumps
Can any of the company-specific risk be diversified away by investing in both 786 Investment and KSB Pumps 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 KSB Pumps 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 KSB Pumps, you can compare the effects of market volatilities on 786 Investment and KSB Pumps 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 KSB Pumps. Check out your portfolio center. Please also check ongoing floating volatility patterns of 786 Investment and KSB Pumps.
Diversification Opportunities for 786 Investment and KSB Pumps
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 786 and KSB is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding 786 Investment Limited and KSB Pumps in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSB Pumps 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 KSB Pumps. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSB Pumps has no effect on the direction of 786 Investment i.e., 786 Investment and KSB Pumps go up and down completely randomly.
Pair Corralation between 786 Investment and KSB Pumps
Assuming the 90 days trading horizon 786 Investment Limited is expected to generate 1.21 times more return on investment than KSB Pumps. However, 786 Investment is 1.21 times more volatile than KSB Pumps. It trades about 0.04 of its potential returns per unit of risk. KSB Pumps is currently generating about 0.04 per unit of risk. If you would invest 562.00 in 786 Investment Limited on August 25, 2024 and sell it today you would earn a total of 120.00 from holding 786 Investment Limited or generate 21.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 84.94% |
| Values | Daily Returns |
786 Investment Limited vs. KSB Pumps
Performance |
| Timeline |
| 786 Investment |
| KSB Pumps |
786 Investment and KSB Pumps Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 786 Investment and KSB Pumps
The main advantage of trading using opposite 786 Investment and KSB Pumps positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 786 Investment position performs unexpectedly, KSB Pumps 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 KSB Pumps will offset losses from the drop in KSB Pumps' long position.| 786 Investment vs. Habib Insurance | 786 Investment vs. Ghandhara Automobile | 786 Investment vs. Century Insurance | 786 Investment vs. Reliance Weaving Mills |
| KSB Pumps vs. Security Investment Bank | KSB Pumps vs. Data Agro | KSB Pumps vs. 786 Investment Limited | KSB Pumps vs. Adamjee 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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