Correlation Between Agha Steel and Pak Gulf
Can any of the company-specific risk be diversified away by investing in both Agha Steel and Pak Gulf 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 Pak Gulf 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 Pak Gulf Leasing, you can compare the effects of market volatilities on Agha Steel and Pak Gulf 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 Pak Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agha Steel and Pak Gulf.
Diversification Opportunities for Agha Steel and Pak Gulf
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Agha and Pak is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Agha Steel Industries and Pak Gulf Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pak Gulf Leasing 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 Pak Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pak Gulf Leasing has no effect on the direction of Agha Steel i.e., Agha Steel and Pak Gulf go up and down completely randomly.
Pair Corralation between Agha Steel and Pak Gulf
Assuming the 90 days trading horizon Agha Steel is expected to generate 152.64 times less return on investment than Pak Gulf. But when comparing it to its historical volatility, Agha Steel Industries is 2.45 times less risky than Pak Gulf. It trades about 0.0 of its potential returns per unit of risk. Pak Gulf Leasing is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 391.00 in Pak Gulf Leasing on August 24, 2024 and sell it today you would earn a total of 709.00 from holding Pak Gulf Leasing or generate 181.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.24% |
| Values | Daily Returns |
Agha Steel Industries vs. Pak Gulf Leasing
Performance |
| Timeline |
| Agha Steel Industries |
| Pak Gulf Leasing |
Agha Steel and Pak Gulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agha Steel and Pak Gulf
The main advantage of trading using opposite Agha Steel and Pak Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agha Steel position performs unexpectedly, Pak Gulf 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 Pak Gulf will offset losses from the drop in Pak Gulf's long position.| Agha Steel vs. Dost Steels | Agha Steel vs. Air Link Communication | Agha Steel vs. JS Investments | Agha Steel vs. Pak Gulf Leasing |
| Pak Gulf vs. Century Insurance | Pak Gulf vs. Air Link Communication | Pak Gulf vs. Adamjee Insurance | Pak Gulf vs. Habib Insurance |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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