Correlation Between Faysal Bank and Lucky Cement
Can any of the company-specific risk be diversified away by investing in both Faysal Bank and Lucky 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 Faysal Bank and Lucky Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faysal Bank and Lucky Cement, you can compare the effects of market volatilities on Faysal Bank and Lucky 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 Faysal Bank with a short position of Lucky Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faysal Bank and Lucky Cement.
Diversification Opportunities for Faysal Bank and Lucky Cement
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Faysal and Lucky is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Faysal Bank and Lucky Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucky Cement and Faysal Bank 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 Faysal Bank are associated (or correlated) with Lucky Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucky Cement has no effect on the direction of Faysal Bank i.e., Faysal Bank and Lucky Cement go up and down completely randomly.
Pair Corralation between Faysal Bank and Lucky Cement
Assuming the 90 days trading horizon Faysal Bank is expected to generate 1.09 times less return on investment than Lucky Cement. In addition to that, Faysal Bank is 1.34 times more volatile than Lucky Cement. It trades about 0.1 of its total potential returns per unit of risk. Lucky Cement is currently generating about 0.14 per unit of volatility. If you would invest 40,863 in Lucky Cement on September 13, 2024 and sell it today you would earn a total of 80,990 from holding Lucky Cement or generate 198.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faysal Bank vs. Lucky Cement
Performance |
| Timeline |
| Faysal Bank |
| Lucky Cement |
Faysal Bank and Lucky Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faysal Bank and Lucky Cement
The main advantage of trading using opposite Faysal Bank and Lucky Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faysal Bank position performs unexpectedly, Lucky 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 Lucky Cement will offset losses from the drop in Lucky Cement's long position.| Faysal Bank vs. Matco Foods | Faysal Bank vs. Engro Polymer Chemicals | Faysal Bank vs. Pakistan Hotel Developers | Faysal Bank vs. Ghani Chemical Industries |
| Lucky Cement vs. Pakistan Telecommunication | Lucky Cement vs. Air Link Communication | Lucky Cement vs. Agritech | Lucky Cement vs. Faysal Bank |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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