Correlation Between Askari Bank and ZAHIDJEE Textile
Can any of the company-specific risk be diversified away by investing in both Askari Bank and ZAHIDJEE Textile 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 ZAHIDJEE Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Askari Bank and ZAHIDJEE Textile Mills, you can compare the effects of market volatilities on Askari Bank and ZAHIDJEE Textile 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 ZAHIDJEE Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari Bank and ZAHIDJEE Textile.
Diversification Opportunities for Askari Bank and ZAHIDJEE Textile
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Askari and ZAHIDJEE is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Askari Bank and ZAHIDJEE Textile Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZAHIDJEE Textile Mills 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 ZAHIDJEE Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZAHIDJEE Textile Mills has no effect on the direction of Askari Bank i.e., Askari Bank and ZAHIDJEE Textile go up and down completely randomly.
Pair Corralation between Askari Bank and ZAHIDJEE Textile
Assuming the 90 days trading horizon Askari Bank is expected to generate 0.48 times more return on investment than ZAHIDJEE Textile. However, Askari Bank is 2.1 times less risky than ZAHIDJEE Textile. It trades about 0.1 of its potential returns per unit of risk. ZAHIDJEE Textile Mills is currently generating about 0.04 per unit of risk. If you would invest 1,591 in Askari Bank on September 3, 2024 and sell it today you would earn a total of 2,363 from holding Askari Bank or generate 148.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 47.08% |
| Values | Daily Returns |
Askari Bank vs. ZAHIDJEE Textile Mills
Performance |
| Timeline |
| Askari Bank |
| ZAHIDJEE Textile Mills |
Askari Bank and ZAHIDJEE Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Askari Bank and ZAHIDJEE Textile
The main advantage of trading using opposite Askari Bank and ZAHIDJEE Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari Bank position performs unexpectedly, ZAHIDJEE Textile 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 ZAHIDJEE Textile will offset losses from the drop in ZAHIDJEE Textile's long position.| Askari Bank vs. Pakistan Hotel Developers | Askari Bank vs. Nimir Industrial Chemical | Askari Bank vs. Oil and Gas | Askari Bank vs. Crescent Steel Allied |
| ZAHIDJEE Textile vs. Masood Textile Mills | ZAHIDJEE Textile vs. Fauji Foods | ZAHIDJEE Textile vs. KSB Pumps | ZAHIDJEE Textile 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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