Correlation Between Amreli Steels and Oil
Can any of the company-specific risk be diversified away by investing in both Amreli Steels and Oil 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 Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amreli Steels and Oil and Gas, you can compare the effects of market volatilities on Amreli Steels and Oil 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 Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amreli Steels and Oil.
Diversification Opportunities for Amreli Steels and Oil
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amreli and Oil is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Amreli Steels and Oil and Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil and Gas 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 Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil and Gas has no effect on the direction of Amreli Steels i.e., Amreli Steels and Oil go up and down completely randomly.
Pair Corralation between Amreli Steels and Oil
Assuming the 90 days trading horizon Amreli Steels is expected to generate 2.43 times less return on investment than Oil. In addition to that, Amreli Steels is 1.27 times more volatile than Oil and Gas. It trades about 0.09 of its total potential returns per unit of risk. Oil and Gas is currently generating about 0.28 per unit of volatility. If you would invest 17,162 in Oil and Gas on August 28, 2024 and sell it today you would earn a total of 2,120 from holding Oil and Gas or generate 12.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amreli Steels vs. Oil and Gas
Performance |
| Timeline |
| Amreli Steels |
| Oil and Gas |
Amreli Steels and Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amreli Steels and Oil
The main advantage of trading using opposite Amreli Steels and Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amreli Steels position performs unexpectedly, Oil 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 Oil will offset losses from the drop in Oil's long position.| Amreli Steels vs. Oil and Gas | Amreli Steels vs. Pakistan State Oil | Amreli Steels vs. Pakistan Petroleum | Amreli Steels vs. Engro |
| Oil vs. Orient Rental Modaraba | Oil vs. ITTEFAQ Iron Industries | Oil vs. Nimir Industrial Chemical | Oil vs. 786 Investment Limited |
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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