Correlation Between Adamjee Insurance and Pakistan Aluminium
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Pakistan Aluminium 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 Pakistan Aluminium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Pakistan Aluminium Beverage, you can compare the effects of market volatilities on Adamjee Insurance and Pakistan Aluminium 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 Pakistan Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Pakistan Aluminium.
Diversification Opportunities for Adamjee Insurance and Pakistan Aluminium
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Adamjee and Pakistan is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Pakistan Aluminium Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Aluminium 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 Pakistan Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Aluminium has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Pakistan Aluminium go up and down completely randomly.
Pair Corralation between Adamjee Insurance and Pakistan Aluminium
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 1.15 times more return on investment than Pakistan Aluminium. However, Adamjee Insurance is 1.15 times more volatile than Pakistan Aluminium Beverage. It trades about -0.06 of its potential returns per unit of risk. Pakistan Aluminium Beverage is currently generating about -0.17 per unit of risk. If you would invest 5,123 in Adamjee Insurance on November 9, 2024 and sell it today you would lose (193.00) from holding Adamjee Insurance or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adamjee Insurance vs. Pakistan Aluminium Beverage
Performance |
| Timeline |
| Adamjee Insurance |
| Pakistan Aluminium |
Adamjee Insurance and Pakistan Aluminium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and Pakistan Aluminium
The main advantage of trading using opposite Adamjee Insurance and Pakistan Aluminium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Pakistan Aluminium 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 Pakistan Aluminium will offset losses from the drop in Pakistan Aluminium's long position.| Adamjee Insurance vs. EFU General Insurance | Adamjee Insurance vs. Shaheen Insurance | Adamjee Insurance vs. Apna Microfinance Bank | Adamjee Insurance vs. Bank of Punjab |
| Pakistan Aluminium vs. IGI Life Insurance | Pakistan Aluminium vs. Adamjee Insurance | Pakistan Aluminium vs. Sitara Chemical Industries | Pakistan Aluminium vs. ORIX Leasing Pakistan |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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