Correlation Between Bank Alfalah and Nishat Mills
Can any of the company-specific risk be diversified away by investing in both Bank Alfalah and Nishat Mills 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 Nishat Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Alfalah and Nishat Mills, you can compare the effects of market volatilities on Bank Alfalah and Nishat Mills 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 Nishat Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Alfalah and Nishat Mills.
Diversification Opportunities for Bank Alfalah and Nishat Mills
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Nishat is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bank Alfalah and Nishat Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nishat Mills 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 Nishat Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nishat Mills has no effect on the direction of Bank Alfalah i.e., Bank Alfalah and Nishat Mills go up and down completely randomly.
Pair Corralation between Bank Alfalah and Nishat Mills
Assuming the 90 days trading horizon Bank Alfalah is expected to generate 1.07 times more return on investment than Nishat Mills. However, Bank Alfalah is 1.07 times more volatile than Nishat Mills. It trades about 0.18 of its potential returns per unit of risk. Nishat Mills is currently generating about 0.07 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Alfalah vs. Nishat Mills
Performance |
| Timeline |
| Bank Alfalah |
| Nishat Mills |
Bank Alfalah and Nishat Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Alfalah and Nishat Mills
The main advantage of trading using opposite Bank Alfalah and Nishat Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Alfalah position performs unexpectedly, Nishat Mills 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 Nishat Mills will offset losses from the drop in Nishat Mills' long position.| Bank Alfalah vs. Masood Textile Mills | Bank Alfalah vs. Fauji Foods | Bank Alfalah vs. KSB Pumps | Bank Alfalah vs. Mari Petroleum |
| Nishat Mills vs. Roshan Packages | Nishat Mills vs. Packages | Nishat Mills vs. National Foods | Nishat Mills vs. Jubilee Life Insurance |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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