Correlation Between Agha Steel and National Bank
Can any of the company-specific risk be diversified away by investing in both Agha Steel and National Bank 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 National Bank 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 National Bank of, you can compare the effects of market volatilities on Agha Steel and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agha Steel and National Bank.
Diversification Opportunities for Agha Steel and National Bank
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Agha and National is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Agha Steel Industries and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Agha Steel i.e., Agha Steel and National Bank go up and down completely randomly.
Pair Corralation between Agha Steel and National Bank
Assuming the 90 days trading horizon Agha Steel is expected to generate 10.08 times less return on investment than National Bank. In addition to that, Agha Steel is 1.22 times more volatile than National Bank of. It trades about 0.01 of its total potential returns per unit of risk. National Bank of is currently generating about 0.15 per unit of volatility. If you would invest 1,998 in National Bank of on September 2, 2024 and sell it today you would earn a total of 5,096 from holding National Bank of or generate 255.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agha Steel Industries vs. National Bank of
Performance |
| Timeline |
| Agha Steel Industries |
| National Bank |
Agha Steel and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agha Steel and National Bank
The main advantage of trading using opposite Agha Steel and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agha Steel position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Agha Steel vs. Habib Insurance | Agha Steel vs. Century Insurance | Agha Steel vs. Reliance Weaving Mills | Agha Steel vs. Media Times |
| National Bank vs. Masood Textile Mills | National Bank vs. Fauji Foods | National Bank vs. KSB Pumps | National Bank 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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