Correlation Between Adamjee Insurance and Bilal Fibres
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Bilal Fibres 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 Bilal Fibres into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Bilal Fibres, you can compare the effects of market volatilities on Adamjee Insurance and Bilal Fibres 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 Bilal Fibres. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Bilal Fibres.
Diversification Opportunities for Adamjee Insurance and Bilal Fibres
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Adamjee and Bilal is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Bilal Fibres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilal Fibres 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 Bilal Fibres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilal Fibres has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Bilal Fibres go up and down completely randomly.
Pair Corralation between Adamjee Insurance and Bilal Fibres
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 1.42 times less return on investment than Bilal Fibres. But when comparing it to its historical volatility, Adamjee Insurance is 1.77 times less risky than Bilal Fibres. It trades about 0.13 of its potential returns per unit of risk. Bilal Fibres is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,441 in Bilal Fibres on November 28, 2024 and sell it today you would earn a total of 109.00 from holding Bilal Fibres or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Adamjee Insurance vs. Bilal Fibres
Performance |
| Timeline |
| Adamjee Insurance |
| Bilal Fibres |
Adamjee Insurance and Bilal Fibres Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and Bilal Fibres
The main advantage of trading using opposite Adamjee Insurance and Bilal Fibres positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Bilal Fibres 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 Bilal Fibres will offset losses from the drop in Bilal Fibres' long position.| Adamjee Insurance vs. Allied Bank | Adamjee Insurance vs. Shaheen Insurance | Adamjee Insurance vs. Engro Polymer Chemicals | Adamjee Insurance vs. Synthetic Products Enterprises |
| Bilal Fibres vs. Metropolitan Steel Corp | Bilal Fibres vs. Avanceon | Bilal Fibres vs. United Insurance | Bilal Fibres vs. Pakistan Telecommunication |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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