Correlation Between First Al and JS Investments
Can any of the company-specific risk be diversified away by investing in both First Al and JS Investments 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 First Al and JS Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Al Noor Modaraba and JS Investments, you can compare the effects of market volatilities on First Al and JS Investments 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 First Al with a short position of JS Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Al and JS Investments.
Diversification Opportunities for First Al and JS Investments
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and JSIL is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding First Al Noor Modaraba and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments and First Al 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 First Al Noor Modaraba are associated (or correlated) with JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of First Al i.e., First Al and JS Investments go up and down completely randomly.
Pair Corralation between First Al and JS Investments
Assuming the 90 days trading horizon First Al Noor Modaraba is expected to generate 1.86 times more return on investment than JS Investments. However, First Al is 1.86 times more volatile than JS Investments. It trades about 0.04 of its potential returns per unit of risk. JS Investments is currently generating about 0.07 per unit of risk. If you would invest 308.00 in First Al Noor Modaraba on September 12, 2024 and sell it today you would earn a total of 17.00 from holding First Al Noor Modaraba or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 54.05% |
| Values | Daily Returns |
First Al Noor Modaraba vs. JS Investments
Performance |
| Timeline |
| First Al Noor |
| JS Investments |
First Al and JS Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Al and JS Investments
The main advantage of trading using opposite First Al and JS Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Al position performs unexpectedly, JS Investments 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 JS Investments will offset losses from the drop in JS Investments' long position.| First Al vs. Security Investment Bank | First Al vs. Dost Steels | First Al vs. ITTEFAQ Iron Industries | First Al vs. International Steels |
| JS Investments vs. Sardar Chemical Industries | JS Investments vs. Engro Polymer Chemicals | JS Investments vs. WorldCall Telecom | JS Investments vs. Pakistan Synthetics |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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