Correlation Between Adamjee Insurance and Leather Up
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Leather Up 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 Leather Up into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Leather Up, you can compare the effects of market volatilities on Adamjee Insurance and Leather Up 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 Leather Up. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Leather Up.
Diversification Opportunities for Adamjee Insurance and Leather Up
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adamjee and Leather is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Leather Up in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leather Up 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 Leather Up. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leather Up has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Leather Up go up and down completely randomly.
Pair Corralation between Adamjee Insurance and Leather Up
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 2.59 times less return on investment than Leather Up. But when comparing it to its historical volatility, Adamjee Insurance is 2.86 times less risky than Leather Up. It trades about 0.11 of its potential returns per unit of risk. Leather Up is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 845.00 in Leather Up on September 12, 2024 and sell it today you would earn a total of 1,567 from holding Leather Up or generate 185.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 79.44% |
| Values | Daily Returns |
Adamjee Insurance vs. Leather Up
Performance |
| Timeline |
| Adamjee Insurance |
| Leather Up |
Adamjee Insurance and Leather Up Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and Leather Up
The main advantage of trading using opposite Adamjee Insurance and Leather Up positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Leather Up 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 Leather Up will offset losses from the drop in Leather Up's long position.| Adamjee Insurance vs. Masood Textile Mills | Adamjee Insurance vs. Fauji Foods | Adamjee Insurance vs. KSB Pumps | Adamjee Insurance vs. Mari Petroleum |
| Leather Up vs. Atlas Insurance | Leather Up vs. Adamjee Insurance | Leather Up vs. Askari Bank | Leather Up vs. Reliance Insurance Co |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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