Correlation Between Askari Bank and Grays Leasing
Can any of the company-specific risk be diversified away by investing in both Askari Bank and Grays 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 Askari Bank and Grays Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Askari Bank and Grays Leasing, you can compare the effects of market volatilities on Askari Bank and Grays 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 Askari Bank with a short position of Grays Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari Bank and Grays Leasing.
Diversification Opportunities for Askari Bank and Grays Leasing
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Askari and Grays is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Askari Bank and Grays Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grays Leasing and Askari Bank 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 Askari Bank are associated (or correlated) with Grays Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grays Leasing has no effect on the direction of Askari Bank i.e., Askari Bank and Grays Leasing go up and down completely randomly.
Pair Corralation between Askari Bank and Grays Leasing
Assuming the 90 days trading horizon Askari Bank is expected to generate 1.95 times less return on investment than Grays Leasing. But when comparing it to its historical volatility, Askari Bank is 2.33 times less risky than Grays Leasing. It trades about 0.1 of its potential returns per unit of risk. Grays Leasing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 282.00 in Grays Leasing on October 21, 2024 and sell it today you would earn a total of 267.00 from holding Grays Leasing or generate 94.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 68.44% |
| Values | Daily Returns |
Askari Bank vs. Grays Leasing
Performance |
| Timeline |
| Askari Bank |
| Grays Leasing |
Askari Bank and Grays Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Askari Bank and Grays Leasing
The main advantage of trading using opposite Askari Bank and Grays Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari Bank position performs unexpectedly, Grays 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 Grays Leasing will offset losses from the drop in Grays Leasing's long position.| Askari Bank vs. Ghandhara Automobile | Askari Bank vs. Fateh Sports Wear | Askari Bank vs. Lotte Chemical Pakistan | Askari Bank vs. Hi Tech Lubricants |
| Grays Leasing vs. Askari Bank | Grays Leasing vs. Century Insurance | Grays Leasing vs. Roshan Packages | Grays Leasing vs. Unilever Pakistan 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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