Correlation Between Beco Steel and ZAHIDJEE Textile
Can any of the company-specific risk be diversified away by investing in both Beco Steel and ZAHIDJEE Textile 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 ZAHIDJEE Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beco Steel and ZAHIDJEE Textile Mills, you can compare the effects of market volatilities on Beco Steel and ZAHIDJEE Textile 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 ZAHIDJEE Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beco Steel and ZAHIDJEE Textile.
Diversification Opportunities for Beco Steel and ZAHIDJEE Textile
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Beco and ZAHIDJEE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Beco Steel and ZAHIDJEE Textile Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZAHIDJEE Textile Mills 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 ZAHIDJEE Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZAHIDJEE Textile Mills has no effect on the direction of Beco Steel i.e., Beco Steel and ZAHIDJEE Textile go up and down completely randomly.
Pair Corralation between Beco Steel and ZAHIDJEE Textile
Assuming the 90 days trading horizon Beco Steel is expected to generate 1.24 times more return on investment than ZAHIDJEE Textile. However, Beco Steel is 1.24 times more volatile than ZAHIDJEE Textile Mills. It trades about 0.26 of its potential returns per unit of risk. ZAHIDJEE Textile Mills is currently generating about 0.23 per unit of risk. If you would invest 620.00 in Beco Steel on September 12, 2024 and sell it today you would earn a total of 222.00 from holding Beco Steel or generate 35.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 65.22% |
| Values | Daily Returns |
Beco Steel vs. ZAHIDJEE Textile Mills
Performance |
| Timeline |
| Beco Steel |
| ZAHIDJEE Textile Mills |
Beco Steel and ZAHIDJEE Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beco Steel and ZAHIDJEE Textile
The main advantage of trading using opposite Beco Steel and ZAHIDJEE Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beco Steel position performs unexpectedly, ZAHIDJEE Textile 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 ZAHIDJEE Textile will offset losses from the drop in ZAHIDJEE Textile's long position.| Beco Steel vs. WorldCall Telecom | Beco Steel vs. Ghandhara Automobile | Beco Steel vs. Data Agro | Beco Steel vs. ITTEFAQ Iron Industries |
| ZAHIDJEE Textile vs. Mughal Iron Steel | ZAHIDJEE Textile vs. Pakistan Aluminium Beverage | ZAHIDJEE Textile vs. Security Investment Bank | ZAHIDJEE Textile vs. Beco Steel |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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