Correlation Between Adamjee Insurance and International Steels
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and International Steels 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 International Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and International Steels, you can compare the effects of market volatilities on Adamjee Insurance and International Steels 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 International Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and International Steels.
Diversification Opportunities for Adamjee Insurance and International Steels
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Adamjee and International is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and International Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Steels 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 International Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Steels has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and International Steels go up and down completely randomly.
Pair Corralation between Adamjee Insurance and International Steels
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 1.43 times more return on investment than International Steels. However, Adamjee Insurance is 1.43 times more volatile than International Steels. It trades about 0.13 of its potential returns per unit of risk. International Steels is currently generating about -0.25 per unit of risk. If you would invest 4,828 in Adamjee Insurance on November 28, 2024 and sell it today you would earn a total of 272.00 from holding Adamjee Insurance or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adamjee Insurance vs. International Steels
Performance |
| Timeline |
| Adamjee Insurance |
| International Steels |
Adamjee Insurance and International Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and International Steels
The main advantage of trading using opposite Adamjee Insurance and International Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, International Steels 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 International Steels will offset losses from the drop in International Steels' long position.| Adamjee Insurance vs. Allied Bank | Adamjee Insurance vs. Shaheen Insurance | Adamjee Insurance vs. Engro Polymer Chemicals | Adamjee Insurance vs. Synthetic Products Enterprises |
| International Steels vs. EFU General Insurance | International Steels vs. Universal Insurance | International Steels vs. Pakistan Reinsurance | International Steels vs. Wah Nobel Chemicals |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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