Correlation Between Ghandhara Automobile and Bank Alfalah
Can any of the company-specific risk be diversified away by investing in both Ghandhara Automobile and Bank Alfalah 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 Ghandhara Automobile and Bank Alfalah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ghandhara Automobile and Bank Alfalah, you can compare the effects of market volatilities on Ghandhara Automobile and Bank Alfalah 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 Ghandhara Automobile with a short position of Bank Alfalah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghandhara Automobile and Bank Alfalah.
Diversification Opportunities for Ghandhara Automobile and Bank Alfalah
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ghandhara and Bank is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ghandhara Automobile and Bank Alfalah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Alfalah and Ghandhara Automobile 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 Ghandhara Automobile are associated (or correlated) with Bank Alfalah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Alfalah has no effect on the direction of Ghandhara Automobile i.e., Ghandhara Automobile and Bank Alfalah go up and down completely randomly.
Pair Corralation between Ghandhara Automobile and Bank Alfalah
Assuming the 90 days trading horizon Ghandhara Automobile is expected to generate 2.11 times more return on investment than Bank Alfalah. However, Ghandhara Automobile is 2.11 times more volatile than Bank Alfalah. It trades about 0.15 of its potential returns per unit of risk. Bank Alfalah is currently generating about 0.14 per unit of risk. If you would invest 3,338 in Ghandhara Automobile on September 2, 2024 and sell it today you would earn a total of 21,036 from holding Ghandhara Automobile or generate 630.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.78% |
| Values | Daily Returns |
Ghandhara Automobile vs. Bank Alfalah
Performance |
| Timeline |
| Ghandhara Automobile |
| Bank Alfalah |
Ghandhara Automobile and Bank Alfalah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghandhara Automobile and Bank Alfalah
The main advantage of trading using opposite Ghandhara Automobile and Bank Alfalah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghandhara Automobile position performs unexpectedly, Bank Alfalah 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 Bank Alfalah will offset losses from the drop in Bank Alfalah's long position.| Ghandhara Automobile vs. Avanceon | Ghandhara Automobile vs. Pakistan Aluminium Beverage | Ghandhara Automobile vs. Hi Tech Lubricants | Ghandhara Automobile vs. Unity Foods |
| Bank Alfalah vs. Murree Brewery | Bank Alfalah vs. Ghandhara Automobile | Bank Alfalah vs. Atlas Insurance | Bank Alfalah vs. Century Insurance |
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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