Correlation Between Amreli Steels and National Refinery
Can any of the company-specific risk be diversified away by investing in both Amreli Steels and National Refinery 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 National Refinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amreli Steels and National Refinery, you can compare the effects of market volatilities on Amreli Steels and National Refinery 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 National Refinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amreli Steels and National Refinery.
Diversification Opportunities for Amreli Steels and National Refinery
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Amreli and National is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Amreli Steels and National Refinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Refinery 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 National Refinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Refinery has no effect on the direction of Amreli Steels i.e., Amreli Steels and National Refinery go up and down completely randomly.
Pair Corralation between Amreli Steels and National Refinery
Assuming the 90 days trading horizon Amreli Steels is expected to generate 0.96 times more return on investment than National Refinery. However, Amreli Steels is 1.04 times less risky than National Refinery. It trades about -0.01 of its potential returns per unit of risk. National Refinery is currently generating about -0.04 per unit of risk. If you would invest 2,624 in Amreli Steels on September 4, 2024 and sell it today you would lose (321.00) from holding Amreli Steels or give up 12.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amreli Steels vs. National Refinery
Performance |
| Timeline |
| Amreli Steels |
| National Refinery |
Amreli Steels and National Refinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amreli Steels and National Refinery
The main advantage of trading using opposite Amreli Steels and National Refinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amreli Steels position performs unexpectedly, National Refinery 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 National Refinery will offset losses from the drop in National Refinery's long position.| Amreli Steels vs. Masood Textile Mills | Amreli Steels vs. Fauji Foods | Amreli Steels vs. KSB Pumps | Amreli Steels vs. Mari Petroleum |
| National Refinery vs. Atlas Insurance | National Refinery vs. Jubilee Life Insurance | National Refinery vs. Quice Food Industries | National Refinery vs. The Organic Meat |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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