Correlation Between East West and Agha Steel
Can any of the company-specific risk be diversified away by investing in both East West and Agha 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 East West and Agha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East West Insurance and Agha Steel Industries, you can compare the effects of market volatilities on East West and Agha 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 East West with a short position of Agha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and Agha Steel.
Diversification Opportunities for East West and Agha Steel
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between East and Agha is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding East West Insurance and Agha Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agha Steel Industries and East West 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 East West Insurance are associated (or correlated) with Agha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agha Steel Industries has no effect on the direction of East West i.e., East West and Agha Steel go up and down completely randomly.
Pair Corralation between East West and Agha Steel
Assuming the 90 days trading horizon East West Insurance is expected to generate 0.27 times more return on investment than Agha Steel. However, East West Insurance is 3.72 times less risky than Agha Steel. It trades about 0.3 of its potential returns per unit of risk. Agha Steel Industries is currently generating about -0.33 per unit of risk. If you would invest 3,771 in East West Insurance on August 30, 2024 and sell it today you would earn a total of 166.00 from holding East West Insurance or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 73.91% |
| Values | Daily Returns |
East West Insurance vs. Agha Steel Industries
Performance |
| Timeline |
| East West Insurance |
| Agha Steel Industries |
East West and Agha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and Agha Steel
The main advantage of trading using opposite East West and Agha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, Agha 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 Agha Steel will offset losses from the drop in Agha Steel's long position.| East West vs. Habib Insurance | East West vs. Century Insurance | East West vs. Reliance Weaving Mills | East West vs. Media Times |
| Agha Steel vs. Silkbank | Agha Steel vs. Soneri Bank | Agha Steel vs. Security Investment Bank | Agha Steel vs. EFU General Insurance |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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