Correlation Between Al Khair and Pakistan Refinery
Can any of the company-specific risk be diversified away by investing in both Al Khair and Pakistan Refinery 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 Al Khair and Pakistan Refinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Al Khair Gadoon Limited and Pakistan Refinery, you can compare the effects of market volatilities on Al Khair and Pakistan Refinery 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 Al Khair with a short position of Pakistan Refinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Khair and Pakistan Refinery.
Diversification Opportunities for Al Khair and Pakistan Refinery
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AKGL and Pakistan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Al Khair Gadoon Limited and Pakistan Refinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Refinery and Al Khair 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 Al Khair Gadoon Limited are associated (or correlated) with Pakistan Refinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Refinery has no effect on the direction of Al Khair i.e., Al Khair and Pakistan Refinery go up and down completely randomly.
Pair Corralation between Al Khair and Pakistan Refinery
Assuming the 90 days trading horizon Al Khair Gadoon Limited is expected to under-perform the Pakistan Refinery. In addition to that, Al Khair is 1.5 times more volatile than Pakistan Refinery. It trades about -0.01 of its total potential returns per unit of risk. Pakistan Refinery is currently generating about 0.01 per unit of volatility. If you would invest 3,361 in Pakistan Refinery on November 11, 2024 and sell it today you would lose (86.00) from holding Pakistan Refinery or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.24% |
| Values | Daily Returns |
Al Khair Gadoon Limited vs. Pakistan Refinery
Performance |
| Timeline |
| Al Khair Gadoon |
| Pakistan Refinery |
Al Khair and Pakistan Refinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Al Khair and Pakistan Refinery
The main advantage of trading using opposite Al Khair and Pakistan Refinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Khair position performs unexpectedly, Pakistan Refinery 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 Pakistan Refinery will offset losses from the drop in Pakistan Refinery's long position.| Al Khair vs. Mari Petroleum | Al Khair vs. Attock Petroleum | Al Khair vs. Habib Insurance | Al Khair vs. Ghandhara Automobile |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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