Correlation Between Askari General and Ittehad Chemicals
Can any of the company-specific risk be diversified away by investing in both Askari General and Ittehad Chemicals 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 Askari General and Ittehad Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Askari General Insurance and Ittehad Chemicals, you can compare the effects of market volatilities on Askari General and Ittehad Chemicals 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 Askari General with a short position of Ittehad Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari General and Ittehad Chemicals.
Diversification Opportunities for Askari General and Ittehad Chemicals
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Askari and Ittehad is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Askari General Insurance and Ittehad Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ittehad Chemicals and Askari General 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 Askari General Insurance are associated (or correlated) with Ittehad Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ittehad Chemicals has no effect on the direction of Askari General i.e., Askari General and Ittehad Chemicals go up and down completely randomly.
Pair Corralation between Askari General and Ittehad Chemicals
Assuming the 90 days trading horizon Askari General is expected to generate 2.11 times less return on investment than Ittehad Chemicals. But when comparing it to its historical volatility, Askari General Insurance is 1.14 times less risky than Ittehad Chemicals. It trades about 0.13 of its potential returns per unit of risk. Ittehad Chemicals is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,700 in Ittehad Chemicals on August 25, 2024 and sell it today you would earn a total of 467.00 from holding Ittehad Chemicals or generate 9.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Askari General Insurance vs. Ittehad Chemicals
Performance |
| Timeline |
| Askari General Insurance |
| Ittehad Chemicals |
Askari General and Ittehad Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Askari General and Ittehad Chemicals
The main advantage of trading using opposite Askari General and Ittehad Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari General position performs unexpectedly, Ittehad Chemicals 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 Ittehad Chemicals will offset losses from the drop in Ittehad Chemicals' long position.| Askari General vs. Habib Bank | Askari General vs. National Bank of | Askari General vs. United Bank | Askari General vs. MCB Bank |
| Ittehad Chemicals vs. Crescent Star Insurance | Ittehad Chemicals vs. Nimir Industrial Chemical | Ittehad Chemicals vs. Hi Tech Lubricants | Ittehad Chemicals vs. Escorts Investment Bank |
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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