Correlation Between Ghandhara Automobile and Beco Steel
Can any of the company-specific risk be diversified away by investing in both Ghandhara Automobile and Beco Steel 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 Beco Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ghandhara Automobile and Beco Steel, you can compare the effects of market volatilities on Ghandhara Automobile and Beco Steel 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 Beco Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghandhara Automobile and Beco Steel.
Diversification Opportunities for Ghandhara Automobile and Beco Steel
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ghandhara and Beco is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ghandhara Automobile and Beco Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beco Steel 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 Beco Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beco Steel has no effect on the direction of Ghandhara Automobile i.e., Ghandhara Automobile and Beco Steel go up and down completely randomly.
Pair Corralation between Ghandhara Automobile and Beco Steel
Assuming the 90 days trading horizon Ghandhara Automobile is expected to generate 1.39 times more return on investment than Beco Steel. However, Ghandhara Automobile is 1.39 times more volatile than Beco Steel. It trades about 0.15 of its potential returns per unit of risk. Beco Steel is currently generating about -0.03 per unit of risk. If you would invest 3,338 in Ghandhara Automobile on August 30, 2024 and sell it today you would earn a total of 21,355 from holding Ghandhara Automobile or generate 639.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 80.51% |
| Values | Daily Returns |
Ghandhara Automobile vs. Beco Steel
Performance |
| Timeline |
| Ghandhara Automobile |
| Beco Steel |
Ghandhara Automobile and Beco Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghandhara Automobile and Beco Steel
The main advantage of trading using opposite Ghandhara Automobile and Beco Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghandhara Automobile position performs unexpectedly, Beco Steel 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 Beco Steel will offset losses from the drop in Beco Steel's long position.| Ghandhara Automobile vs. Habib Insurance | Ghandhara Automobile vs. Century Insurance | Ghandhara Automobile vs. Reliance Weaving Mills | Ghandhara Automobile vs. Media Times |
| Beco Steel vs. Habib Insurance | Beco Steel vs. Century Insurance | Beco Steel vs. Reliance Weaving Mills | Beco Steel vs. Media Times |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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