Correlation Between Big Bird and Aisha Steel
Can any of the company-specific risk be diversified away by investing in both Big Bird and Aisha 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 Aisha 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 Aisha Steel Mills, you can compare the effects of market volatilities on Big Bird and Aisha 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 Aisha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Bird and Aisha Steel.
Diversification Opportunities for Big Bird and Aisha Steel
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Big and Aisha is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Big Bird Foods and Aisha Steel Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aisha Steel Mills 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 Aisha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aisha Steel Mills has no effect on the direction of Big Bird i.e., Big Bird and Aisha Steel go up and down completely randomly.
Pair Corralation between Big Bird and Aisha Steel
Assuming the 90 days trading horizon Big Bird Foods is expected to generate 1.35 times more return on investment than Aisha Steel. However, Big Bird is 1.35 times more volatile than Aisha Steel Mills. It trades about 0.04 of its potential returns per unit of risk. Aisha Steel Mills is currently generating about 0.03 per unit of risk. If you would invest 5,232 in Big Bird Foods on September 5, 2024 and sell it today you would earn a total of 463.00 from holding Big Bird Foods or generate 8.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 35.68% |
| Values | Daily Returns |
Big Bird Foods vs. Aisha Steel Mills
Performance |
| Timeline |
| Big Bird Foods |
| Aisha Steel Mills |
Big Bird and Aisha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Bird and Aisha Steel
The main advantage of trading using opposite Big Bird and Aisha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Bird position performs unexpectedly, Aisha 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 Aisha Steel will offset losses from the drop in Aisha Steel's long position.| Big Bird vs. Habib Insurance | Big Bird vs. Pakistan Refinery | Big Bird vs. Century Insurance | Big Bird vs. Reliance Weaving Mills |
| Aisha Steel vs. Masood Textile Mills | Aisha Steel vs. Fauji Foods | Aisha Steel vs. KSB Pumps | Aisha Steel vs. Mari Petroleum |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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