Correlation Between Ghandhara Automobile and Fauji Cement
Can any of the company-specific risk be diversified away by investing in both Ghandhara Automobile and Fauji Cement 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 Fauji Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ghandhara Automobile and Fauji Cement, you can compare the effects of market volatilities on Ghandhara Automobile and Fauji Cement 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 Fauji Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghandhara Automobile and Fauji Cement.
Diversification Opportunities for Ghandhara Automobile and Fauji Cement
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ghandhara and Fauji is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ghandhara Automobile and Fauji Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fauji Cement 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 Fauji Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fauji Cement has no effect on the direction of Ghandhara Automobile i.e., Ghandhara Automobile and Fauji Cement go up and down completely randomly.
Pair Corralation between Ghandhara Automobile and Fauji Cement
Assuming the 90 days trading horizon Ghandhara Automobile is expected to generate 1.44 times more return on investment than Fauji Cement. However, Ghandhara Automobile is 1.44 times more volatile than Fauji Cement. It trades about 0.46 of its potential returns per unit of risk. Fauji Cement is currently generating about 0.05 per unit of risk. If you would invest 30,608 in Ghandhara Automobile on November 3, 2024 and sell it today you would earn a total of 16,196 from holding Ghandhara Automobile or generate 52.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ghandhara Automobile vs. Fauji Cement
Performance |
| Timeline |
| Ghandhara Automobile |
| Fauji Cement |
Ghandhara Automobile and Fauji Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghandhara Automobile and Fauji Cement
The main advantage of trading using opposite Ghandhara Automobile and Fauji Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghandhara Automobile position performs unexpectedly, Fauji Cement 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 Fauji Cement will offset losses from the drop in Fauji Cement's long position.| Ghandhara Automobile vs. Quice Food Industries | Ghandhara Automobile vs. Metropolitan Steel Corp | Ghandhara Automobile vs. ITTEFAQ Iron Industries | Ghandhara Automobile vs. Big Bird Foods |
| Fauji Cement vs. Pak Datacom | Fauji Cement vs. Ittehad Chemicals | Fauji Cement vs. Sardar Chemical Industries | Fauji Cement vs. Unity Foods |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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