Correlation Between Aisha Steel and Wah Nobel
Can any of the company-specific risk be diversified away by investing in both Aisha Steel and Wah Nobel 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 Wah Nobel 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 Wah Nobel Chemicals, you can compare the effects of market volatilities on Aisha Steel and Wah Nobel 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 Wah Nobel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aisha Steel and Wah Nobel.
Diversification Opportunities for Aisha Steel and Wah Nobel
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aisha and Wah is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aisha Steel Mills and Wah Nobel Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Nobel Chemicals 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 Wah Nobel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Nobel Chemicals has no effect on the direction of Aisha Steel i.e., Aisha Steel and Wah Nobel go up and down completely randomly.
Pair Corralation between Aisha Steel and Wah Nobel
Assuming the 90 days trading horizon Aisha Steel Mills is expected to generate 1.39 times more return on investment than Wah Nobel. However, Aisha Steel is 1.39 times more volatile than Wah Nobel Chemicals. It trades about -0.08 of its potential returns per unit of risk. Wah Nobel Chemicals is currently generating about -0.25 per unit of risk. If you would invest 1,174 in Aisha Steel Mills on November 5, 2024 and sell it today you would lose (49.00) from holding Aisha Steel Mills or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aisha Steel Mills vs. Wah Nobel Chemicals
Performance |
| Timeline |
| Aisha Steel Mills |
| Wah Nobel Chemicals |
Aisha Steel and Wah Nobel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aisha Steel and Wah Nobel
The main advantage of trading using opposite Aisha Steel and Wah Nobel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aisha Steel position performs unexpectedly, Wah Nobel 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 Wah Nobel will offset losses from the drop in Wah Nobel's long position.| Aisha Steel vs. Crescent Star Insurance | Aisha Steel vs. Sitara Chemical Industries | Aisha Steel vs. Century Insurance | Aisha Steel vs. Jubilee Life Insurance |
| Wah Nobel vs. Crescent Star Insurance | Wah Nobel vs. Premier Insurance | Wah Nobel vs. Shaheen Insurance | Wah Nobel vs. United Insurance |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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