Correlation Between Agha Steel and Silkbank
Can any of the company-specific risk be diversified away by investing in both Agha Steel and Silkbank 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 Silkbank 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 Silkbank, you can compare the effects of market volatilities on Agha Steel and Silkbank 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 Silkbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agha Steel and Silkbank.
Diversification Opportunities for Agha Steel and Silkbank
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Agha and Silkbank is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Agha Steel Industries and Silkbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silkbank 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 Silkbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silkbank has no effect on the direction of Agha Steel i.e., Agha Steel and Silkbank go up and down completely randomly.
Pair Corralation between Agha Steel and Silkbank
Assuming the 90 days trading horizon Agha Steel Industries is expected to under-perform the Silkbank. But the stock apears to be less risky and, when comparing its historical volatility, Agha Steel Industries is 3.31 times less risky than Silkbank. The stock trades about -0.14 of its potential returns per unit of risk. The Silkbank is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Silkbank on November 28, 2024 and sell it today you would earn a total of 13.00 from holding Silkbank or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agha Steel Industries vs. Silkbank
Performance |
| Timeline |
| Agha Steel Industries |
| Silkbank |
Agha Steel and Silkbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agha Steel and Silkbank
The main advantage of trading using opposite Agha Steel and Silkbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agha Steel position performs unexpectedly, Silkbank 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 Silkbank will offset losses from the drop in Silkbank's long position.| Agha Steel vs. Dost Steels | Agha Steel vs. Pakistan Telecommunication | Agha Steel vs. Unilever Pakistan Foods | Agha Steel vs. Wah Nobel Chemicals |
| Silkbank vs. Century Insurance | Silkbank vs. Atlas Insurance | Silkbank vs. Universal Insurance | Silkbank vs. Ittehad Chemicals |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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