Correlation Between Agha Steel and Unity Foods
Can any of the company-specific risk be diversified away by investing in both Agha Steel and Unity Foods 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 Unity Foods 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 Unity Foods, you can compare the effects of market volatilities on Agha Steel and Unity Foods 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 Unity Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agha Steel and Unity Foods.
Diversification Opportunities for Agha Steel and Unity Foods
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Agha and Unity is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Agha Steel Industries and Unity Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Foods 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 Unity Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Foods has no effect on the direction of Agha Steel i.e., Agha Steel and Unity Foods go up and down completely randomly.
Pair Corralation between Agha Steel and Unity Foods
Assuming the 90 days trading horizon Agha Steel is expected to generate 21.49 times less return on investment than Unity Foods. In addition to that, Agha Steel is 1.18 times more volatile than Unity Foods. It trades about 0.0 of its total potential returns per unit of risk. Unity Foods is currently generating about 0.08 per unit of volatility. If you would invest 1,376 in Unity Foods on October 25, 2024 and sell it today you would earn a total of 1,859 from holding Unity Foods or generate 135.1% 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. Unity Foods
Performance |
| Timeline |
| Agha Steel Industries |
| Unity Foods |
Agha Steel and Unity Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agha Steel and Unity Foods
The main advantage of trading using opposite Agha Steel and Unity Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agha Steel position performs unexpectedly, Unity Foods 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 Unity Foods will offset losses from the drop in Unity Foods' long position.| Agha Steel vs. Engro Polymer Chemicals | Agha Steel vs. United Insurance | Agha Steel vs. National Foods | Agha Steel vs. Unity Foods |
| Unity Foods vs. Murree Brewery | Unity Foods vs. Aisha Steel Mills | Unity Foods vs. Avanceon | Unity Foods vs. Amreli Steels |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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