Correlation Between Agha Steel and East West
Can any of the company-specific risk be diversified away by investing in both Agha Steel and East West 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 East West 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 East West Insurance, you can compare the effects of market volatilities on Agha Steel and East West 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 East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agha Steel and East West.
Diversification Opportunities for Agha Steel and East West
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Agha and East is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Agha Steel Industries and East West Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West 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 East West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East West Insurance has no effect on the direction of Agha Steel i.e., Agha Steel and East West go up and down completely randomly.
Pair Corralation between Agha Steel and East West
Assuming the 90 days trading horizon Agha Steel Industries is expected to under-perform the East West. In addition to that, Agha Steel is 3.72 times more volatile than East West Insurance. It trades about -0.33 of its total potential returns per unit of risk. East West Insurance is currently generating about 0.3 per unit of volatility. If you would invest 3,771 in East West Insurance on August 30, 2024 and sell it today you would earn a total of 166.00 from holding East West Insurance or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 73.91% |
| Values | Daily Returns |
Agha Steel Industries vs. East West Insurance
Performance |
| Timeline |
| Agha Steel Industries |
| East West Insurance |
Agha Steel and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agha Steel and East West
The main advantage of trading using opposite Agha Steel and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agha Steel position performs unexpectedly, East West 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 East West will offset losses from the drop in East West's long position.| Agha Steel vs. Silkbank | Agha Steel vs. Soneri Bank | Agha Steel vs. Security Investment Bank | Agha Steel vs. EFU General Insurance |
| East West vs. Habib Insurance | East West vs. Century Insurance | East West vs. Reliance Weaving Mills | East West vs. Media Times |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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