Correlation Between Beco Steel and Gul Ahmed
Can any of the company-specific risk be diversified away by investing in both Beco Steel and Gul Ahmed 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 Beco Steel and Gul Ahmed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beco Steel and Gul Ahmed Textile, you can compare the effects of market volatilities on Beco Steel and Gul Ahmed 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 Beco Steel with a short position of Gul Ahmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beco Steel and Gul Ahmed.
Diversification Opportunities for Beco Steel and Gul Ahmed
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beco and Gul is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Beco Steel and Gul Ahmed Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gul Ahmed Textile and Beco Steel 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 Beco Steel are associated (or correlated) with Gul Ahmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gul Ahmed Textile has no effect on the direction of Beco Steel i.e., Beco Steel and Gul Ahmed go up and down completely randomly.
Pair Corralation between Beco Steel and Gul Ahmed
Assuming the 90 days trading horizon Beco Steel is expected to generate 3.13 times less return on investment than Gul Ahmed. In addition to that, Beco Steel is 1.59 times more volatile than Gul Ahmed Textile. It trades about 0.01 of its total potential returns per unit of risk. Gul Ahmed Textile is currently generating about 0.06 per unit of volatility. If you would invest 1,778 in Gul Ahmed Textile on September 12, 2024 and sell it today you would earn a total of 693.00 from holding Gul Ahmed Textile or generate 38.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.45% |
| Values | Daily Returns |
Beco Steel vs. Gul Ahmed Textile
Performance |
| Timeline |
| Beco Steel |
| Gul Ahmed Textile |
Beco Steel and Gul Ahmed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beco Steel and Gul Ahmed
The main advantage of trading using opposite Beco Steel and Gul Ahmed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beco Steel position performs unexpectedly, Gul Ahmed 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 Gul Ahmed will offset losses from the drop in Gul Ahmed's long position.| Beco Steel vs. WorldCall Telecom | Beco Steel vs. Ghandhara Automobile | Beco Steel vs. Data Agro | Beco Steel vs. ITTEFAQ Iron Industries |
| Gul Ahmed vs. Agha Steel Industries | Gul Ahmed vs. Air Link Communication | Gul Ahmed vs. Beco Steel | Gul Ahmed vs. Amreli Steels |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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