Correlation Between Allied Bank and Atlas Battery
Can any of the company-specific risk be diversified away by investing in both Allied Bank and Atlas Battery 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 Allied Bank and Atlas Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Bank and Atlas Battery, you can compare the effects of market volatilities on Allied Bank and Atlas Battery 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 Allied Bank with a short position of Atlas Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Bank and Atlas Battery.
Diversification Opportunities for Allied Bank and Atlas Battery
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Allied and Atlas is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Allied Bank and Atlas Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Battery and Allied Bank 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 Allied Bank are associated (or correlated) with Atlas Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Battery has no effect on the direction of Allied Bank i.e., Allied Bank and Atlas Battery go up and down completely randomly.
Pair Corralation between Allied Bank and Atlas Battery
Assuming the 90 days trading horizon Allied Bank is expected to generate 0.54 times more return on investment than Atlas Battery. However, Allied Bank is 1.84 times less risky than Atlas Battery. It trades about 0.17 of its potential returns per unit of risk. Atlas Battery is currently generating about 0.09 per unit of risk. If you would invest 7,400 in Allied Bank on September 12, 2024 and sell it today you would earn a total of 6,577 from holding Allied Bank or generate 88.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.93% |
| Values | Daily Returns |
Allied Bank vs. Atlas Battery
Performance |
| Timeline |
| Allied Bank |
| Atlas Battery |
Allied Bank and Atlas Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Bank and Atlas Battery
The main advantage of trading using opposite Allied Bank and Atlas Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Bank position performs unexpectedly, Atlas Battery 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 Atlas Battery will offset losses from the drop in Atlas Battery's long position.| Allied Bank vs. Oil and Gas | Allied Bank vs. Pakistan State Oil | Allied Bank vs. Pakistan Petroleum | Allied Bank vs. Fauji Fertilizer |
| Atlas Battery vs. Shaheen Insurance | Atlas Battery vs. Allied Bank | Atlas Battery vs. Pak Gulf Leasing | Atlas Battery vs. Atlas 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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