Correlation Between Fauji Fertilizer and Attock Petroleum
Can any of the company-specific risk be diversified away by investing in both Fauji Fertilizer and Attock Petroleum 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 Fauji Fertilizer and Attock Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fauji Fertilizer and Attock Petroleum, you can compare the effects of market volatilities on Fauji Fertilizer and Attock Petroleum 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 Fauji Fertilizer with a short position of Attock Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fauji Fertilizer and Attock Petroleum.
Diversification Opportunities for Fauji Fertilizer and Attock Petroleum
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fauji and Attock is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fauji Fertilizer and Attock Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Attock Petroleum and Fauji Fertilizer 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 Fauji Fertilizer are associated (or correlated) with Attock Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Attock Petroleum has no effect on the direction of Fauji Fertilizer i.e., Fauji Fertilizer and Attock Petroleum go up and down completely randomly.
Pair Corralation between Fauji Fertilizer and Attock Petroleum
Assuming the 90 days trading horizon Fauji Fertilizer is expected to generate 1.75 times more return on investment than Attock Petroleum. However, Fauji Fertilizer is 1.75 times more volatile than Attock Petroleum. It trades about 0.24 of its potential returns per unit of risk. Attock Petroleum is currently generating about 0.39 per unit of risk. If you would invest 28,391 in Fauji Fertilizer on September 4, 2024 and sell it today you would earn a total of 4,858 from holding Fauji Fertilizer or generate 17.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fauji Fertilizer vs. Attock Petroleum
Performance |
| Timeline |
| Fauji Fertilizer |
| Attock Petroleum |
Fauji Fertilizer and Attock Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fauji Fertilizer and Attock Petroleum
The main advantage of trading using opposite Fauji Fertilizer and Attock Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fauji Fertilizer position performs unexpectedly, Attock Petroleum 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 Attock Petroleum will offset losses from the drop in Attock Petroleum's long position.| Fauji Fertilizer vs. Masood Textile Mills | Fauji Fertilizer vs. Fauji Foods | Fauji Fertilizer vs. KSB Pumps | Fauji Fertilizer vs. Mari Petroleum |
| Attock Petroleum vs. Wah Nobel Chemicals | Attock Petroleum vs. Data Agro | Attock Petroleum vs. Ittehad Chemicals | Attock Petroleum vs. Metropolitan Steel Corp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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