Correlation Between Agha Steel and Bank of Punjab
Can any of the company-specific risk be diversified away by investing in both Agha Steel and Bank of Punjab 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 Agha Steel and Bank of Punjab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agha Steel Industries and Bank of Punjab, you can compare the effects of market volatilities on Agha Steel and Bank of Punjab 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 Agha Steel with a short position of Bank of Punjab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agha Steel and Bank of Punjab.
Diversification Opportunities for Agha Steel and Bank of Punjab
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Agha and Bank is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Agha Steel Industries and Bank of Punjab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Punjab and Agha Steel 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 Agha Steel Industries are associated (or correlated) with Bank of Punjab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Punjab has no effect on the direction of Agha Steel i.e., Agha Steel and Bank of Punjab go up and down completely randomly.
Pair Corralation between Agha Steel and Bank of Punjab
Assuming the 90 days trading horizon Agha Steel Industries is expected to under-perform the Bank of Punjab. But the stock apears to be less risky and, when comparing its historical volatility, Agha Steel Industries is 1.22 times less risky than Bank of Punjab. The stock trades about -0.33 of its potential returns per unit of risk. The Bank of Punjab is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 553.00 in Bank of Punjab on August 30, 2024 and sell it today you would earn a total of 232.00 from holding Bank of Punjab or generate 41.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agha Steel Industries vs. Bank of Punjab
Performance |
| Timeline |
| Agha Steel Industries |
| Bank of Punjab |
Agha Steel and Bank of Punjab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agha Steel and Bank of Punjab
The main advantage of trading using opposite Agha Steel and Bank of Punjab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agha Steel position performs unexpectedly, Bank of Punjab 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 of Punjab will offset losses from the drop in Bank of Punjab's long position.| Agha Steel vs. Silkbank | Agha Steel vs. Soneri Bank | Agha Steel vs. Security Investment Bank | Agha Steel vs. EFU General Insurance |
| Bank of Punjab vs. Masood Textile Mills | Bank of Punjab vs. Fauji Foods | Bank of Punjab vs. KSB Pumps | Bank of Punjab vs. Mari Petroleum |
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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