Correlation Between Fauji Foods and Al Shaheer
Can any of the company-specific risk be diversified away by investing in both Fauji Foods and Al Shaheer 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 Foods and Al Shaheer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fauji Foods and Al Shaheer, you can compare the effects of market volatilities on Fauji Foods and Al Shaheer 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 Foods with a short position of Al Shaheer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fauji Foods and Al Shaheer.
Diversification Opportunities for Fauji Foods and Al Shaheer
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fauji and ASC is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fauji Foods and Al Shaheer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Shaheer and Fauji Foods 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 Foods are associated (or correlated) with Al Shaheer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Shaheer has no effect on the direction of Fauji Foods i.e., Fauji Foods and Al Shaheer go up and down completely randomly.
Pair Corralation between Fauji Foods and Al Shaheer
Assuming the 90 days trading horizon Fauji Foods is expected to generate 0.7 times more return on investment than Al Shaheer. However, Fauji Foods is 1.43 times less risky than Al Shaheer. It trades about 0.26 of its potential returns per unit of risk. Al Shaheer is currently generating about 0.02 per unit of risk. If you would invest 1,001 in Fauji Foods on August 26, 2024 and sell it today you would earn a total of 173.00 from holding Fauji Foods or generate 17.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fauji Foods vs. Al Shaheer
Performance |
| Timeline |
| Fauji Foods |
| Al Shaheer |
Fauji Foods and Al Shaheer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fauji Foods and Al Shaheer
The main advantage of trading using opposite Fauji Foods and Al Shaheer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fauji Foods position performs unexpectedly, Al Shaheer 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 Al Shaheer will offset losses from the drop in Al Shaheer's long position.| Fauji Foods vs. Beco Steel | Fauji Foods vs. TPL Insurance | Fauji Foods vs. Agha Steel Industries | Fauji Foods vs. East West Insurance |
| Al Shaheer vs. Agritech | Al Shaheer vs. Big Bird Foods | Al Shaheer vs. Packages | Al Shaheer vs. NetSol Technologies |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |