Correlation Between Aisha Steel and Pakistan Reinsurance
Can any of the company-specific risk be diversified away by investing in both Aisha Steel and Pakistan Reinsurance 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 Pakistan Reinsurance 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 Pakistan Reinsurance, you can compare the effects of market volatilities on Aisha Steel and Pakistan Reinsurance 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 Pakistan Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aisha Steel and Pakistan Reinsurance.
Diversification Opportunities for Aisha Steel and Pakistan Reinsurance
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aisha and Pakistan is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aisha Steel Mills and Pakistan Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Reinsurance 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 Pakistan Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Reinsurance has no effect on the direction of Aisha Steel i.e., Aisha Steel and Pakistan Reinsurance go up and down completely randomly.
Pair Corralation between Aisha Steel and Pakistan Reinsurance
Assuming the 90 days trading horizon Aisha Steel Mills is expected to under-perform the Pakistan Reinsurance. In addition to that, Aisha Steel is 2.17 times more volatile than Pakistan Reinsurance. It trades about -0.02 of its total potential returns per unit of risk. Pakistan Reinsurance is currently generating about 0.04 per unit of volatility. If you would invest 1,483 in Pakistan Reinsurance on October 26, 2024 and sell it today you would earn a total of 16.00 from holding Pakistan Reinsurance or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aisha Steel Mills vs. Pakistan Reinsurance
Performance |
| Timeline |
| Aisha Steel Mills |
| Pakistan Reinsurance |
Aisha Steel and Pakistan Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aisha Steel and Pakistan Reinsurance
The main advantage of trading using opposite Aisha Steel and Pakistan Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aisha Steel position performs unexpectedly, Pakistan Reinsurance 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 Reinsurance will offset losses from the drop in Pakistan Reinsurance's long position.| Aisha Steel vs. Pakistan Hotel Developers | Aisha Steel vs. Ghani Chemical Industries | Aisha Steel vs. Reliance Insurance Co | Aisha Steel vs. Soneri Bank |
| Pakistan Reinsurance vs. Wah Nobel Chemicals | Pakistan Reinsurance vs. Atlas Insurance | Pakistan Reinsurance vs. Adamjee Insurance | Pakistan Reinsurance vs. Reliance Insurance Co |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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