Correlation Between Adamjee Insurance and ORIX Leasing
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and ORIX Leasing 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 ORIX Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and ORIX Leasing Pakistan, you can compare the effects of market volatilities on Adamjee Insurance and ORIX Leasing 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 ORIX Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and ORIX Leasing.
Diversification Opportunities for Adamjee Insurance and ORIX Leasing
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Adamjee and ORIX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and ORIX Leasing Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX Leasing Pakistan 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 ORIX Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX Leasing Pakistan has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and ORIX Leasing go up and down completely randomly.
Pair Corralation between Adamjee Insurance and ORIX Leasing
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 1.29 times less return on investment than ORIX Leasing. In addition to that, Adamjee Insurance is 1.25 times more volatile than ORIX Leasing Pakistan. It trades about 0.08 of its total potential returns per unit of risk. ORIX Leasing Pakistan is currently generating about 0.14 per unit of volatility. If you would invest 1,326 in ORIX Leasing Pakistan on October 28, 2024 and sell it today you would earn a total of 2,357 from holding ORIX Leasing Pakistan or generate 177.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.38% |
| Values | Daily Returns |
Adamjee Insurance vs. ORIX Leasing Pakistan
Performance |
| Timeline |
| Adamjee Insurance |
| ORIX Leasing Pakistan |
Adamjee Insurance and ORIX Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and ORIX Leasing
The main advantage of trading using opposite Adamjee Insurance and ORIX Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, ORIX Leasing 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 ORIX Leasing will offset losses from the drop in ORIX Leasing's long position.| Adamjee Insurance vs. ITTEFAQ Iron Industries | Adamjee Insurance vs. Metropolitan Steel Corp | Adamjee Insurance vs. National Foods | Adamjee Insurance vs. Pakistan Telecommunication |
| ORIX Leasing vs. Masood Textile Mills | ORIX Leasing vs. Fauji Foods | ORIX Leasing vs. KSB Pumps | ORIX Leasing vs. Mari Petroleum |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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