Correlation Between Bank Alfalah and Gul Ahmed
Can any of the company-specific risk be diversified away by investing in both Bank Alfalah and Gul Ahmed 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 Bank Alfalah and Gul Ahmed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Alfalah and Gul Ahmed Textile, you can compare the effects of market volatilities on Bank Alfalah and Gul Ahmed 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 Bank Alfalah with a short position of Gul Ahmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Alfalah and Gul Ahmed.
Diversification Opportunities for Bank Alfalah and Gul Ahmed
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Gul is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bank Alfalah and Gul Ahmed Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gul Ahmed Textile and Bank Alfalah 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 Bank Alfalah are associated (or correlated) with Gul Ahmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gul Ahmed Textile has no effect on the direction of Bank Alfalah i.e., Bank Alfalah and Gul Ahmed go up and down completely randomly.
Pair Corralation between Bank Alfalah and Gul Ahmed
Assuming the 90 days trading horizon Bank Alfalah is expected to generate 1.03 times more return on investment than Gul Ahmed. However, Bank Alfalah is 1.03 times more volatile than Gul Ahmed Textile. It trades about 0.18 of its potential returns per unit of risk. Gul Ahmed Textile is currently generating about 0.05 per unit of risk. If you would invest 2,205 in Bank Alfalah on September 4, 2024 and sell it today you would earn a total of 6,113 from holding Bank Alfalah or generate 277.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Alfalah vs. Gul Ahmed Textile
Performance |
| Timeline |
| Bank Alfalah |
| Gul Ahmed Textile |
Bank Alfalah and Gul Ahmed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Alfalah and Gul Ahmed
The main advantage of trading using opposite Bank Alfalah and Gul Ahmed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Alfalah position performs unexpectedly, Gul Ahmed 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 Gul Ahmed will offset losses from the drop in Gul Ahmed's long position.| Bank Alfalah vs. Masood Textile Mills | Bank Alfalah vs. Fauji Foods | Bank Alfalah vs. KSB Pumps | Bank Alfalah vs. Mari Petroleum |
| Gul Ahmed vs. Atlas Insurance | Gul Ahmed vs. EFU General Insurance | Gul Ahmed vs. Habib Insurance | Gul Ahmed vs. Data Agro |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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