Correlation Between Adamjee Insurance and Thatta Cement
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Thatta Cement 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 Thatta Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Thatta Cement, you can compare the effects of market volatilities on Adamjee Insurance and Thatta Cement 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 Thatta Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Thatta Cement.
Diversification Opportunities for Adamjee Insurance and Thatta Cement
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Adamjee and Thatta is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Thatta Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thatta Cement 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 Thatta Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thatta Cement has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Thatta Cement go up and down completely randomly.
Pair Corralation between Adamjee Insurance and Thatta Cement
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 1.19 times more return on investment than Thatta Cement. However, Adamjee Insurance is 1.19 times more volatile than Thatta Cement. It trades about -0.14 of its potential returns per unit of risk. Thatta Cement is currently generating about -0.17 per unit of risk. If you would invest 5,235 in Adamjee Insurance on November 7, 2024 and sell it today you would lose (425.00) from holding Adamjee Insurance or give up 8.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adamjee Insurance vs. Thatta Cement
Performance |
| Timeline |
| Adamjee Insurance |
| Thatta Cement |
Adamjee Insurance and Thatta Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and Thatta Cement
The main advantage of trading using opposite Adamjee Insurance and Thatta Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Thatta Cement 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 Thatta Cement will offset losses from the drop in Thatta Cement's long position.| Adamjee Insurance vs. Masood Textile Mills | Adamjee Insurance vs. Fauji Foods | Adamjee Insurance vs. KSB Pumps | Adamjee Insurance vs. Mari Petroleum |
| Thatta Cement vs. K Electric | Thatta Cement vs. Lucky Cement | Thatta Cement vs. Hub Power | Thatta Cement vs. Pakistan Telecommunication |
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.
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