Correlation Between Adamjee Insurance and KSB Pumps
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and KSB Pumps 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 KSB Pumps into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and KSB Pumps, you can compare the effects of market volatilities on Adamjee Insurance and KSB Pumps 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 KSB Pumps. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and KSB Pumps.
Diversification Opportunities for Adamjee Insurance and KSB Pumps
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Adamjee and KSB is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and KSB Pumps in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSB Pumps 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 KSB Pumps. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSB Pumps has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and KSB Pumps go up and down completely randomly.
Pair Corralation between Adamjee Insurance and KSB Pumps
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 0.57 times more return on investment than KSB Pumps. However, Adamjee Insurance is 1.77 times less risky than KSB Pumps. It trades about 0.07 of its potential returns per unit of risk. KSB Pumps is currently generating about 0.02 per unit of risk. If you would invest 2,384 in Adamjee Insurance on August 25, 2024 and sell it today you would earn a total of 1,734 from holding Adamjee Insurance or generate 72.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.4% |
| Values | Daily Returns |
Adamjee Insurance vs. KSB Pumps
Performance |
| Timeline |
| Adamjee Insurance |
| KSB Pumps |
Adamjee Insurance and KSB Pumps Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and KSB Pumps
The main advantage of trading using opposite Adamjee Insurance and KSB Pumps positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, KSB Pumps 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 KSB Pumps will offset losses from the drop in KSB Pumps' long position.| Adamjee Insurance vs. Habib Bank | Adamjee Insurance vs. National Bank of | Adamjee Insurance vs. United Bank | Adamjee Insurance vs. MCB Bank |
| KSB Pumps vs. Security Investment Bank | KSB Pumps vs. Data Agro | KSB Pumps vs. 786 Investment Limited | KSB Pumps vs. Adamjee Insurance |
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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