Correlation Between Amreli Steels and Agha Steel
Can any of the company-specific risk be diversified away by investing in both Amreli Steels and Agha Steel 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 Amreli Steels and Agha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amreli Steels and Agha Steel Industries, you can compare the effects of market volatilities on Amreli Steels and Agha Steel 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 Amreli Steels with a short position of Agha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amreli Steels and Agha Steel.
Diversification Opportunities for Amreli Steels and Agha Steel
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amreli and Agha is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Amreli Steels and Agha Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agha Steel Industries and Amreli Steels 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 Amreli Steels are associated (or correlated) with Agha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agha Steel Industries has no effect on the direction of Amreli Steels i.e., Amreli Steels and Agha Steel go up and down completely randomly.
Pair Corralation between Amreli Steels and Agha Steel
Assuming the 90 days trading horizon Amreli Steels is expected to generate 1.32 times more return on investment than Agha Steel. However, Amreli Steels is 1.32 times more volatile than Agha Steel Industries. It trades about -0.2 of its potential returns per unit of risk. Agha Steel Industries is currently generating about -0.27 per unit of risk. If you would invest 2,616 in Amreli Steels on November 5, 2024 and sell it today you would lose (231.00) from holding Amreli Steels or give up 8.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amreli Steels vs. Agha Steel Industries
Performance |
| Timeline |
| Amreli Steels |
| Agha Steel Industries |
Amreli Steels and Agha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amreli Steels and Agha Steel
The main advantage of trading using opposite Amreli Steels and Agha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amreli Steels position performs unexpectedly, Agha Steel 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 Agha Steel will offset losses from the drop in Agha Steel's long position.| Amreli Steels vs. Adamjee Insurance | Amreli Steels vs. Pakistan Reinsurance | Amreli Steels vs. Atlas Insurance | Amreli Steels vs. MCB Bank |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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