Correlation Between Fauji Foods and Invest Capital
Can any of the company-specific risk be diversified away by investing in both Fauji Foods and Invest Capital 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 Invest Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fauji Foods and Invest Capital Investment, you can compare the effects of market volatilities on Fauji Foods and Invest Capital 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 Invest Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fauji Foods and Invest Capital.
Diversification Opportunities for Fauji Foods and Invest Capital
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fauji and Invest is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fauji Foods and Invest Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invest Capital Investment 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 Invest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invest Capital Investment has no effect on the direction of Fauji Foods i.e., Fauji Foods and Invest Capital go up and down completely randomly.
Pair Corralation between Fauji Foods and Invest Capital
Assuming the 90 days trading horizon Fauji Foods is expected to generate 0.52 times more return on investment than Invest Capital. However, Fauji Foods is 1.94 times less risky than Invest Capital. It trades about 0.11 of its potential returns per unit of risk. Invest Capital Investment is currently generating about 0.05 per unit of risk. If you would invest 612.00 in Fauji Foods on September 12, 2024 and sell it today you would earn a total of 758.00 from holding Fauji Foods or generate 123.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fauji Foods vs. Invest Capital Investment
Performance |
| Timeline |
| Fauji Foods |
| Invest Capital Investment |
Fauji Foods and Invest Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fauji Foods and Invest Capital
The main advantage of trading using opposite Fauji Foods and Invest Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fauji Foods position performs unexpectedly, Invest Capital 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 Invest Capital will offset losses from the drop in Invest Capital's long position.| Fauji Foods vs. National Bank of | Fauji Foods vs. Engro Polymer Chemicals | Fauji Foods vs. ORIX Leasing Pakistan | Fauji Foods vs. Agritech |
| Invest Capital vs. Masood Textile Mills | Invest Capital vs. Fauji Foods | Invest Capital vs. KSB Pumps | Invest Capital vs. Mari Petroleum |
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 Stocks Directory module to find actively traded stocks across global markets.
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