Correlation Between Amreli Steels and Khyber Tobacco
Can any of the company-specific risk be diversified away by investing in both Amreli Steels and Khyber Tobacco 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 Khyber Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amreli Steels and Khyber Tobacco, you can compare the effects of market volatilities on Amreli Steels and Khyber Tobacco 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 Khyber Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amreli Steels and Khyber Tobacco.
Diversification Opportunities for Amreli Steels and Khyber Tobacco
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amreli and Khyber is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Amreli Steels and Khyber Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khyber Tobacco 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 Khyber Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khyber Tobacco has no effect on the direction of Amreli Steels i.e., Amreli Steels and Khyber Tobacco go up and down completely randomly.
Pair Corralation between Amreli Steels and Khyber Tobacco
Assuming the 90 days trading horizon Amreli Steels is expected to under-perform the Khyber Tobacco. But the stock apears to be less risky and, when comparing its historical volatility, Amreli Steels is 2.11 times less risky than Khyber Tobacco. The stock trades about -0.05 of its potential returns per unit of risk. The Khyber Tobacco is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 35,995 in Khyber Tobacco on September 13, 2024 and sell it today you would earn a total of 32,504 from holding Khyber Tobacco or generate 90.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 71.9% |
| Values | Daily Returns |
Amreli Steels vs. Khyber Tobacco
Performance |
| Timeline |
| Amreli Steels |
| Khyber Tobacco |
Amreli Steels and Khyber Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amreli Steels and Khyber Tobacco
The main advantage of trading using opposite Amreli Steels and Khyber Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amreli Steels position performs unexpectedly, Khyber Tobacco 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 Khyber Tobacco will offset losses from the drop in Khyber Tobacco's long position.| Amreli Steels vs. Unilever Pakistan Foods | Amreli Steels vs. Packages | Amreli Steels vs. Big Bird Foods | Amreli Steels vs. Matco Foods |
| Khyber Tobacco vs. Habib Insurance | Khyber Tobacco vs. Ghandhara Automobile | Khyber Tobacco vs. Century Insurance | Khyber Tobacco vs. Reliance Weaving Mills |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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