Correlation Between Al Ghazi and Hinopak Motors
Can any of the company-specific risk be diversified away by investing in both Al Ghazi and Hinopak Motors 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 Al Ghazi and Hinopak Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Al Ghazi Tractors and Hinopak Motors, you can compare the effects of market volatilities on Al Ghazi and Hinopak Motors 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 Al Ghazi with a short position of Hinopak Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Ghazi and Hinopak Motors.
Diversification Opportunities for Al Ghazi and Hinopak Motors
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AGTL and Hinopak is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Al Ghazi Tractors and Hinopak Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hinopak Motors and Al Ghazi 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 Al Ghazi Tractors are associated (or correlated) with Hinopak Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hinopak Motors has no effect on the direction of Al Ghazi i.e., Al Ghazi and Hinopak Motors go up and down completely randomly.
Pair Corralation between Al Ghazi and Hinopak Motors
Assuming the 90 days trading horizon Al Ghazi Tractors is expected to under-perform the Hinopak Motors. But the stock apears to be less risky and, when comparing its historical volatility, Al Ghazi Tractors is 1.28 times less risky than Hinopak Motors. The stock trades about -0.1 of its potential returns per unit of risk. The Hinopak Motors is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 28,851 in Hinopak Motors on August 31, 2024 and sell it today you would earn a total of 315.00 from holding Hinopak Motors or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Al Ghazi Tractors vs. Hinopak Motors
Performance |
| Timeline |
| Al Ghazi Tractors |
| Hinopak Motors |
Al Ghazi and Hinopak Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Al Ghazi and Hinopak Motors
The main advantage of trading using opposite Al Ghazi and Hinopak Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Ghazi position performs unexpectedly, Hinopak Motors 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 Hinopak Motors will offset losses from the drop in Hinopak Motors' long position.| Al Ghazi vs. Synthetic Products Enterprises | Al Ghazi vs. Aisha Steel Mills | Al Ghazi vs. Sitara Chemical Industries | Al Ghazi vs. Agha Steel Industries |
| Hinopak Motors vs. Masood Textile Mills | Hinopak Motors vs. Fauji Foods | Hinopak Motors vs. KSB Pumps | Hinopak Motors vs. Mari Petroleum |
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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