Correlation Between Big Bird and Adamjee Insurance
Can any of the company-specific risk be diversified away by investing in both Big Bird and Adamjee Insurance 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 Adamjee Insurance 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 Adamjee Insurance, you can compare the effects of market volatilities on Big Bird and Adamjee Insurance 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 Adamjee Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Bird and Adamjee Insurance.
Diversification Opportunities for Big Bird and Adamjee Insurance
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Big and Adamjee is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Big Bird Foods and Adamjee Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamjee Insurance 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 Adamjee Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adamjee Insurance has no effect on the direction of Big Bird i.e., Big Bird and Adamjee Insurance go up and down completely randomly.
Pair Corralation between Big Bird and Adamjee Insurance
Assuming the 90 days trading horizon Big Bird Foods is expected to under-perform the Adamjee Insurance. In addition to that, Big Bird is 1.81 times more volatile than Adamjee Insurance. It trades about 0.0 of its total potential returns per unit of risk. Adamjee Insurance is currently generating about 0.08 per unit of volatility. If you would invest 2,425 in Adamjee Insurance on November 19, 2024 and sell it today you would earn a total of 2,626 from holding Adamjee Insurance or generate 108.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 28.51% |
| Values | Daily Returns |
Big Bird Foods vs. Adamjee Insurance
Performance |
| Timeline |
| Big Bird Foods |
| Adamjee Insurance |
Big Bird and Adamjee Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Bird and Adamjee Insurance
The main advantage of trading using opposite Big Bird and Adamjee Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Bird position performs unexpectedly, Adamjee Insurance 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 Adamjee Insurance will offset losses from the drop in Adamjee Insurance's long position.| Big Bird vs. Air Link Communication | Big Bird vs. IBL HealthCare | Big Bird vs. Hi Tech Lubricants | Big Bird vs. 786 Investment Limited |
| Adamjee Insurance vs. Unilever Pakistan Foods | Adamjee Insurance vs. Fauji Foods | Adamjee Insurance vs. Matco Foods | Adamjee Insurance vs. National Foods |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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