Correlation Between Agha Steel and Escorts Investment
Can any of the company-specific risk be diversified away by investing in both Agha Steel and Escorts Investment 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 Escorts Investment 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 Escorts Investment Bank, you can compare the effects of market volatilities on Agha Steel and Escorts Investment 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 Escorts Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agha Steel and Escorts Investment.
Diversification Opportunities for Agha Steel and Escorts Investment
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Agha and Escorts is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Agha Steel Industries and Escorts Investment Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Escorts Investment Bank 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 Escorts Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Escorts Investment Bank has no effect on the direction of Agha Steel i.e., Agha Steel and Escorts Investment go up and down completely randomly.
Pair Corralation between Agha Steel and Escorts Investment
Assuming the 90 days trading horizon Agha Steel Industries is expected to under-perform the Escorts Investment. But the stock apears to be less risky and, when comparing its historical volatility, Agha Steel Industries is 1.34 times less risky than Escorts Investment. The stock trades about -0.08 of its potential returns per unit of risk. The Escorts Investment Bank is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 363.00 in Escorts Investment Bank on August 30, 2024 and sell it today you would earn a total of 37.00 from holding Escorts Investment Bank or generate 10.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agha Steel Industries vs. Escorts Investment Bank
Performance |
| Timeline |
| Agha Steel Industries |
| Escorts Investment Bank |
Agha Steel and Escorts Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agha Steel and Escorts Investment
The main advantage of trading using opposite Agha Steel and Escorts Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agha Steel position performs unexpectedly, Escorts Investment 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 Escorts Investment will offset losses from the drop in Escorts Investment's long position.| Agha Steel vs. Silkbank | Agha Steel vs. Soneri Bank | Agha Steel vs. Security Investment Bank | Agha Steel vs. EFU General Insurance |
| Escorts Investment vs. Masood Textile Mills | Escorts Investment vs. Fauji Foods | Escorts Investment vs. KSB Pumps | Escorts Investment 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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