Correlation Between Adamjee Insurance and Loads
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Loads 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 Loads into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Loads, you can compare the effects of market volatilities on Adamjee Insurance and Loads 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 Loads. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Loads.
Diversification Opportunities for Adamjee Insurance and Loads
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adamjee and Loads is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Loads in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loads 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 Loads. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loads has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Loads go up and down completely randomly.
Pair Corralation between Adamjee Insurance and Loads
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 1.26 times less return on investment than Loads. But when comparing it to its historical volatility, Adamjee Insurance is 1.77 times less risky than Loads. It trades about 0.07 of its potential returns per unit of risk. Loads is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 800.00 in Loads on September 4, 2024 and sell it today you would earn a total of 626.00 from holding Loads or generate 78.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.56% |
| Values | Daily Returns |
Adamjee Insurance vs. Loads
Performance |
| Timeline |
| Adamjee Insurance |
| Loads |
Adamjee Insurance and Loads Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and Loads
The main advantage of trading using opposite Adamjee Insurance and Loads positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Loads 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 Loads will offset losses from the drop in Loads' long position.| Adamjee Insurance vs. Oil and Gas | Adamjee Insurance vs. Pakistan State Oil | Adamjee Insurance vs. Pakistan Petroleum | Adamjee Insurance vs. Fauji Fertilizer |
| Loads vs. Packages | Loads vs. Matco Foods | Loads vs. National Foods | Loads vs. Pakistan Aluminium Beverage |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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