Correlation Between Adamjee Insurance and Attock Petroleum
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Attock Petroleum 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 Adamjee Insurance and Attock Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Attock Petroleum, you can compare the effects of market volatilities on Adamjee Insurance and Attock Petroleum 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 Adamjee Insurance with a short position of Attock Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Attock Petroleum.
Diversification Opportunities for Adamjee Insurance and Attock Petroleum
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adamjee and Attock is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Attock Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Attock Petroleum and Adamjee Insurance 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 Adamjee Insurance are associated (or correlated) with Attock Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Attock Petroleum has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Attock Petroleum go up and down completely randomly.
Pair Corralation between Adamjee Insurance and Attock Petroleum
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 1.19 times more return on investment than Attock Petroleum. However, Adamjee Insurance is 1.19 times more volatile than Attock Petroleum. It trades about 0.08 of its potential returns per unit of risk. Attock Petroleum is currently generating about 0.08 per unit of risk. If you would invest 2,485 in Adamjee Insurance on November 2, 2024 and sell it today you would earn a total of 2,319 from holding Adamjee Insurance or generate 93.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.76% |
| Values | Daily Returns |
Adamjee Insurance vs. Attock Petroleum
Performance |
| Timeline |
| Adamjee Insurance |
| Attock Petroleum |
Adamjee Insurance and Attock Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and Attock Petroleum
The main advantage of trading using opposite Adamjee Insurance and Attock Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Attock Petroleum 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 Attock Petroleum will offset losses from the drop in Attock Petroleum's long position.| Adamjee Insurance vs. Pakistan Tobacco | Adamjee Insurance vs. Pakistan Aluminium Beverage | Adamjee Insurance vs. Ittehad Chemicals | Adamjee Insurance vs. Murree Brewery |
| Attock Petroleum vs. Ghani Chemical Industries | Attock Petroleum vs. Sitara Chemical Industries | Attock Petroleum vs. Fauji Foods | Attock Petroleum vs. Sardar Chemical Industries |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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