Correlation Between Aisha Steel and K Electric
Can any of the company-specific risk be diversified away by investing in both Aisha Steel and K Electric 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 Aisha Steel and K Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aisha Steel Mills and K Electric, you can compare the effects of market volatilities on Aisha Steel and K Electric 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 Aisha Steel with a short position of K Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aisha Steel and K Electric.
Diversification Opportunities for Aisha Steel and K Electric
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aisha and KEL is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aisha Steel Mills and K Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Electric and Aisha Steel 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 Aisha Steel Mills are associated (or correlated) with K Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Electric has no effect on the direction of Aisha Steel i.e., Aisha Steel and K Electric go up and down completely randomly.
Pair Corralation between Aisha Steel and K Electric
Assuming the 90 days trading horizon Aisha Steel Mills is expected to generate 1.08 times more return on investment than K Electric. However, Aisha Steel is 1.08 times more volatile than K Electric. It trades about 0.29 of its potential returns per unit of risk. K Electric is currently generating about 0.26 per unit of risk. If you would invest 647.00 in Aisha Steel Mills on September 1, 2024 and sell it today you would earn a total of 188.00 from holding Aisha Steel Mills or generate 29.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Aisha Steel Mills vs. K Electric
Performance |
| Timeline |
| Aisha Steel Mills |
| K Electric |
Aisha Steel and K Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aisha Steel and K Electric
The main advantage of trading using opposite Aisha Steel and K Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aisha Steel position performs unexpectedly, K Electric 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 K Electric will offset losses from the drop in K Electric's long position.| Aisha Steel vs. Air Link Communication | Aisha Steel vs. Pakistan Synthetics | Aisha Steel vs. IBL HealthCare | Aisha Steel vs. Ghani Chemical Industries |
| K Electric vs. Agha Steel Industries | K Electric vs. Aisha Steel Mills | K Electric vs. Pakistan Synthetics | K Electric vs. Sitara Chemical Industries |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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