Correlation Between Agha Steel and JS Investments
Can any of the company-specific risk be diversified away by investing in both Agha Steel and JS Investments 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 JS Investments 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 JS Investments, you can compare the effects of market volatilities on Agha Steel and JS Investments 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 JS Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agha Steel and JS Investments.
Diversification Opportunities for Agha Steel and JS Investments
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Agha and JSIL is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Agha Steel Industries and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments 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 JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of Agha Steel i.e., Agha Steel and JS Investments go up and down completely randomly.
Pair Corralation between Agha Steel and JS Investments
Assuming the 90 days trading horizon Agha Steel Industries is expected to under-perform the JS Investments. But the stock apears to be less risky and, when comparing its historical volatility, Agha Steel Industries is 1.04 times less risky than JS Investments. The stock trades about -0.33 of its potential returns per unit of risk. The JS Investments is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,199 in JS Investments on August 30, 2024 and sell it today you would earn a total of 146.00 from holding JS Investments or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Agha Steel Industries vs. JS Investments
Performance |
| Timeline |
| Agha Steel Industries |
| JS Investments |
Agha Steel and JS Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agha Steel and JS Investments
The main advantage of trading using opposite Agha Steel and JS Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agha Steel position performs unexpectedly, JS Investments 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 JS Investments will offset losses from the drop in JS Investments' long position.| Agha Steel vs. Silkbank | Agha Steel vs. Soneri Bank | Agha Steel vs. Security Investment Bank | Agha Steel vs. EFU General Insurance |
| JS Investments vs. Masood Textile Mills | JS Investments vs. Fauji Foods | JS Investments vs. KSB Pumps | JS Investments 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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