Correlation Between Adamjee Insurance and Silkbank
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Silkbank 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 Silkbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Silkbank, you can compare the effects of market volatilities on Adamjee Insurance and Silkbank 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 Silkbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Silkbank.
Diversification Opportunities for Adamjee Insurance and Silkbank
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Adamjee and Silkbank is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Silkbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silkbank 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 Silkbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silkbank has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Silkbank go up and down completely randomly.
Pair Corralation between Adamjee Insurance and Silkbank
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 0.9 times more return on investment than Silkbank. However, Adamjee Insurance is 1.12 times less risky than Silkbank. It trades about 0.03 of its potential returns per unit of risk. Silkbank is currently generating about -0.02 per unit of risk. If you would invest 4,991 in Adamjee Insurance on October 25, 2024 and sell it today you would earn a total of 36.00 from holding Adamjee Insurance or generate 0.72% 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. Silkbank
Performance |
| Timeline |
| Adamjee Insurance |
| Silkbank |
Adamjee Insurance and Silkbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and Silkbank
The main advantage of trading using opposite Adamjee Insurance and Silkbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Silkbank 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 Silkbank will offset losses from the drop in Silkbank's long position.| Adamjee Insurance vs. Pak Datacom | Adamjee Insurance vs. Universal Insurance | Adamjee Insurance vs. JS Investments | Adamjee Insurance vs. Reliance Insurance Co |
| Silkbank vs. NetSol Technologies | Silkbank vs. Pakistan Aluminium Beverage | Silkbank vs. Big Bird Foods | Silkbank vs. Matco Foods |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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