Correlation Between Askari General and Pakistan Aluminium
Can any of the company-specific risk be diversified away by investing in both Askari General and Pakistan Aluminium 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 Pakistan Aluminium 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 Pakistan Aluminium Beverage, you can compare the effects of market volatilities on Askari General and Pakistan Aluminium 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 Pakistan Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari General and Pakistan Aluminium.
Diversification Opportunities for Askari General and Pakistan Aluminium
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Askari and Pakistan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Askari General Insurance and Pakistan Aluminium Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Aluminium 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 Pakistan Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Aluminium has no effect on the direction of Askari General i.e., Askari General and Pakistan Aluminium go up and down completely randomly.
Pair Corralation between Askari General and Pakistan Aluminium
Assuming the 90 days trading horizon Askari General Insurance is expected to generate 0.81 times more return on investment than Pakistan Aluminium. However, Askari General Insurance is 1.23 times less risky than Pakistan Aluminium. It trades about 0.25 of its potential returns per unit of risk. Pakistan Aluminium Beverage is currently generating about -0.13 per unit of risk. If you would invest 2,826 in Askari General Insurance on November 5, 2024 and sell it today you would earn a total of 249.00 from holding Askari General Insurance or generate 8.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Askari General Insurance vs. Pakistan Aluminium Beverage
Performance |
| Timeline |
| Askari General Insurance |
| Pakistan Aluminium |
Askari General and Pakistan Aluminium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Askari General and Pakistan Aluminium
The main advantage of trading using opposite Askari General and Pakistan Aluminium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari General position performs unexpectedly, Pakistan Aluminium 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 Aluminium will offset losses from the drop in Pakistan Aluminium's long position.| Askari General vs. Masood Textile Mills | Askari General vs. Fauji Foods | Askari General vs. KSB Pumps | Askari General vs. Mari Petroleum |
| Pakistan Aluminium vs. Apna Microfinance Bank | Pakistan Aluminium vs. EFU General Insurance | Pakistan Aluminium vs. Pakistan Reinsurance | Pakistan Aluminium vs. Universal 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |