Correlation Between Agha Steel and Pakistan Hotel
Can any of the company-specific risk be diversified away by investing in both Agha Steel and Pakistan Hotel 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 Pakistan Hotel 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 Pakistan Hotel Developers, you can compare the effects of market volatilities on Agha Steel and Pakistan Hotel 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 Pakistan Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agha Steel and Pakistan Hotel.
Diversification Opportunities for Agha Steel and Pakistan Hotel
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Agha and Pakistan is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Agha Steel Industries and Pakistan Hotel Developers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Hotel Developers 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 Pakistan Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Hotel Developers has no effect on the direction of Agha Steel i.e., Agha Steel and Pakistan Hotel go up and down completely randomly.
Pair Corralation between Agha Steel and Pakistan Hotel
Assuming the 90 days trading horizon Agha Steel Industries is expected to under-perform the Pakistan Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Agha Steel Industries is 3.14 times less risky than Pakistan Hotel. The stock trades about 0.0 of its potential returns per unit of risk. The Pakistan Hotel Developers is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 7,698 in Pakistan Hotel Developers on November 1, 2024 and sell it today you would lose (2,658) from holding Pakistan Hotel Developers or give up 34.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.05% |
| Values | Daily Returns |
Agha Steel Industries vs. Pakistan Hotel Developers
Performance |
| Timeline |
| Agha Steel Industries |
| Pakistan Hotel Developers |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Agha Steel and Pakistan Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agha Steel and Pakistan Hotel
The main advantage of trading using opposite Agha Steel and Pakistan Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agha Steel position performs unexpectedly, Pakistan Hotel 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 Pakistan Hotel will offset losses from the drop in Pakistan Hotel's long position.| Agha Steel vs. JS Investments | Agha Steel vs. Pak Datacom | Agha Steel vs. Century Insurance | Agha Steel vs. Shaheen Insurance |
| Pakistan Hotel vs. Beco Steel | Pakistan Hotel vs. Agha Steel Industries | Pakistan Hotel vs. Atlas Insurance | Pakistan Hotel vs. Fateh Sports Wear |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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