Correlation Between Big Bird and Wah Nobel
Can any of the company-specific risk be diversified away by investing in both Big Bird and Wah Nobel 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 Wah Nobel 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 Wah Nobel Chemicals, you can compare the effects of market volatilities on Big Bird and Wah Nobel 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 Wah Nobel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Bird and Wah Nobel.
Diversification Opportunities for Big Bird and Wah Nobel
Very good diversification
The 3 months correlation between Big and Wah is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Big Bird Foods and Wah Nobel Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Nobel Chemicals 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 Wah Nobel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Nobel Chemicals has no effect on the direction of Big Bird i.e., Big Bird and Wah Nobel go up and down completely randomly.
Pair Corralation between Big Bird and Wah Nobel
Assuming the 90 days trading horizon Big Bird Foods is expected to generate 1.68 times more return on investment than Wah Nobel. However, Big Bird is 1.68 times more volatile than Wah Nobel Chemicals. It trades about 0.07 of its potential returns per unit of risk. Wah Nobel Chemicals is currently generating about 0.04 per unit of risk. If you would invest 5,232 in Big Bird Foods on August 26, 2024 and sell it today you would earn a total of 951.00 from holding Big Bird Foods or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 36.24% |
| Values | Daily Returns |
Big Bird Foods vs. Wah Nobel Chemicals
Performance |
| Timeline |
| Big Bird Foods |
| Wah Nobel Chemicals |
Big Bird and Wah Nobel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Bird and Wah Nobel
The main advantage of trading using opposite Big Bird and Wah Nobel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Bird position performs unexpectedly, Wah Nobel 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 Wah Nobel will offset losses from the drop in Wah Nobel's long position.| Big Bird vs. Habib Insurance | Big Bird vs. Ghandhara Automobile | Big Bird vs. Century Insurance | Big Bird vs. Reliance Weaving Mills |
| Wah Nobel vs. Adamjee Insurance | Wah Nobel vs. Ghani Chemical Industries | Wah Nobel vs. Jubilee Life Insurance | Wah Nobel vs. Oil and Gas |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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