Correlation Between Big Bird and Agha Steel
Can any of the company-specific risk be diversified away by investing in both Big Bird and Agha Steel 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 Big Bird and Agha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Bird Foods and Agha Steel Industries, you can compare the effects of market volatilities on Big Bird and Agha Steel 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 Big Bird with a short position of Agha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Bird and Agha Steel.
Diversification Opportunities for Big Bird and Agha Steel
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Big and Agha is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Big Bird Foods and Agha Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agha Steel Industries and Big Bird 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 Big Bird Foods are associated (or correlated) with Agha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agha Steel Industries has no effect on the direction of Big Bird i.e., Big Bird and Agha Steel go up and down completely randomly.
Pair Corralation between Big Bird and Agha Steel
Assuming the 90 days trading horizon Big Bird Foods is expected to generate 1.33 times more return on investment than Agha Steel. However, Big Bird is 1.33 times more volatile than Agha Steel Industries. It trades about 0.01 of its potential returns per unit of risk. Agha Steel Industries is currently generating about 0.0 per unit of risk. If you would invest 5,232 in Big Bird Foods on November 4, 2024 and sell it today you would lose (178.00) from holding Big Bird Foods or give up 3.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 26.24% |
| Values | Daily Returns |
Big Bird Foods vs. Agha Steel Industries
Performance |
| Timeline |
| Big Bird Foods |
| Agha Steel Industries |
Big Bird and Agha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Bird and Agha Steel
The main advantage of trading using opposite Big Bird and Agha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Bird position performs unexpectedly, Agha Steel 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 Agha Steel will offset losses from the drop in Agha Steel's long position.| Big Bird vs. Data Agro | Big Bird vs. Air Link Communication | Big Bird vs. WorldCall Telecom | Big Bird vs. Jubilee Life Insurance |
| Agha Steel vs. Habib Insurance | Agha Steel vs. Ghandhara Automobile | Agha Steel vs. Shadab Textile Mills | Agha Steel vs. Century 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 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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