Correlation Between Agha Steel and Century Insurance
Can any of the company-specific risk be diversified away by investing in both Agha Steel and Century Insurance 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 Century Insurance 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 Century Insurance, you can compare the effects of market volatilities on Agha Steel and Century Insurance 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 Century Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agha Steel and Century Insurance.
Diversification Opportunities for Agha Steel and Century Insurance
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Agha and Century is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Agha Steel Industries and Century Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Insurance 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 Century Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Insurance has no effect on the direction of Agha Steel i.e., Agha Steel and Century Insurance go up and down completely randomly.
Pair Corralation between Agha Steel and Century Insurance
Assuming the 90 days trading horizon Agha Steel Industries is expected to under-perform the Century Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Agha Steel Industries is 1.21 times less risky than Century Insurance. The stock trades about -0.05 of its potential returns per unit of risk. The Century Insurance is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,738 in Century Insurance on August 27, 2024 and sell it today you would earn a total of 1,862 from holding Century Insurance or generate 107.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.0% |
| Values | Daily Returns |
Agha Steel Industries vs. Century Insurance
Performance |
| Timeline |
| Agha Steel Industries |
| Century Insurance |
Agha Steel and Century Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agha Steel and Century Insurance
The main advantage of trading using opposite Agha Steel and Century Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agha Steel position performs unexpectedly, Century Insurance 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 Century Insurance will offset losses from the drop in Century Insurance's long position.| Agha Steel vs. Habib Insurance | Agha Steel vs. Ghandhara Automobile | Agha Steel vs. Century Insurance | Agha Steel vs. Reliance Weaving Mills |
| Century Insurance vs. Habib Bank | Century Insurance vs. National Bank of | Century Insurance vs. United Bank | Century Insurance vs. MCB Bank |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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