Correlation Between Adamjee Insurance and Packages
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Packages 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 Packages into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Packages, you can compare the effects of market volatilities on Adamjee Insurance and Packages 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 Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Packages.
Diversification Opportunities for Adamjee Insurance and Packages
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Adamjee and Packages is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Packages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packages 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 Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packages has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Packages go up and down completely randomly.
Pair Corralation between Adamjee Insurance and Packages
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 5.63 times less return on investment than Packages. But when comparing it to its historical volatility, Adamjee Insurance is 1.27 times less risky than Packages. It trades about 0.08 of its potential returns per unit of risk. Packages is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 43,665 in Packages on August 30, 2024 and sell it today you would earn a total of 11,761 from holding Packages or generate 26.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adamjee Insurance vs. Packages
Performance |
| Timeline |
| Adamjee Insurance |
| Packages |
Adamjee Insurance and Packages Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and Packages
The main advantage of trading using opposite Adamjee Insurance and Packages positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Packages 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 Packages will offset losses from the drop in Packages' long position.| Adamjee Insurance vs. Masood Textile Mills | Adamjee Insurance vs. Fauji Foods | Adamjee Insurance vs. KSB Pumps | Adamjee Insurance vs. Mari Petroleum |
| Packages vs. Masood Textile Mills | Packages vs. Fauji Foods | Packages vs. KSB Pumps | Packages 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |