Correlation Between Adamjee Insurance and Big Bird
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Big Bird 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 Big Bird into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Big Bird Foods, you can compare the effects of market volatilities on Adamjee Insurance and Big Bird 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 Big Bird. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Big Bird.
Diversification Opportunities for Adamjee Insurance and Big Bird
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Adamjee and Big is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Big Bird Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Bird Foods 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 Big Bird. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Bird Foods has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Big Bird go up and down completely randomly.
Pair Corralation between Adamjee Insurance and Big Bird
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 0.91 times more return on investment than Big Bird. However, Adamjee Insurance is 1.1 times less risky than Big Bird. It trades about 0.1 of its potential returns per unit of risk. Big Bird Foods is currently generating about -0.13 per unit of risk. If you would invest 3,908 in Adamjee Insurance on August 25, 2024 and sell it today you would earn a total of 210.00 from holding Adamjee Insurance or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adamjee Insurance vs. Big Bird Foods
Performance |
| Timeline |
| Adamjee Insurance |
| Big Bird Foods |
Adamjee Insurance and Big Bird Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and Big Bird
The main advantage of trading using opposite Adamjee Insurance and Big Bird positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Big Bird 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 Big Bird will offset losses from the drop in Big Bird's long position.| Adamjee Insurance vs. Security Investment Bank | Adamjee Insurance vs. MCB Investment Manag | Adamjee Insurance vs. 786 Investment Limited | Adamjee Insurance vs. Reliance Insurance Co |
| Big Bird vs. Habib Insurance | Big Bird vs. Ghandhara Automobile | Big Bird vs. Century Insurance | Big Bird vs. Reliance Weaving Mills |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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