Correlation Between Century Insurance and Thatta Cement
Can any of the company-specific risk be diversified away by investing in both Century Insurance and Thatta Cement 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 Century Insurance and Thatta Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Insurance and Thatta Cement, you can compare the effects of market volatilities on Century Insurance and Thatta Cement 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 Century Insurance with a short position of Thatta Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Insurance and Thatta Cement.
Diversification Opportunities for Century Insurance and Thatta Cement
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Century and Thatta is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Century Insurance and Thatta Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thatta Cement and Century Insurance 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 Century Insurance are associated (or correlated) with Thatta Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thatta Cement has no effect on the direction of Century Insurance i.e., Century Insurance and Thatta Cement go up and down completely randomly.
Pair Corralation between Century Insurance and Thatta Cement
Assuming the 90 days trading horizon Century Insurance is expected to generate 1.25 times less return on investment than Thatta Cement. In addition to that, Century Insurance is 1.32 times more volatile than Thatta Cement. It trades about 0.12 of its total potential returns per unit of risk. Thatta Cement is currently generating about 0.19 per unit of volatility. If you would invest 1,242 in Thatta Cement on August 28, 2024 and sell it today you would earn a total of 13,258 from holding Thatta Cement or generate 1067.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 65.33% |
| Values | Daily Returns |
Century Insurance vs. Thatta Cement
Performance |
| Timeline |
| Century Insurance |
| Thatta Cement |
Century Insurance and Thatta Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Insurance and Thatta Cement
The main advantage of trading using opposite Century Insurance and Thatta Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Insurance position performs unexpectedly, Thatta Cement 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 Thatta Cement will offset losses from the drop in Thatta Cement's long position.| Century Insurance vs. Habib Bank | Century Insurance vs. National Bank of | Century Insurance vs. United Bank | Century Insurance vs. MCB Bank |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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