Correlation Between Ghandhara Automobile and Khyber Tobacco
Can any of the company-specific risk be diversified away by investing in both Ghandhara Automobile and Khyber Tobacco 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 Khyber Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ghandhara Automobile and Khyber Tobacco, you can compare the effects of market volatilities on Ghandhara Automobile and Khyber Tobacco 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 Khyber Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghandhara Automobile and Khyber Tobacco.
Diversification Opportunities for Ghandhara Automobile and Khyber Tobacco
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ghandhara and Khyber is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ghandhara Automobile and Khyber Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khyber Tobacco 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 Khyber Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khyber Tobacco has no effect on the direction of Ghandhara Automobile i.e., Ghandhara Automobile and Khyber Tobacco go up and down completely randomly.
Pair Corralation between Ghandhara Automobile and Khyber Tobacco
Assuming the 90 days trading horizon Ghandhara Automobile is expected to generate 0.8 times more return on investment than Khyber Tobacco. However, Ghandhara Automobile is 1.25 times less risky than Khyber Tobacco. It trades about 0.16 of its potential returns per unit of risk. Khyber Tobacco is currently generating about 0.04 per unit of risk. If you would invest 6,502 in Ghandhara Automobile on September 14, 2024 and sell it today you would earn a total of 22,122 from holding Ghandhara Automobile or generate 340.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 48.13% |
| Values | Daily Returns |
Ghandhara Automobile vs. Khyber Tobacco
Performance |
| Timeline |
| Ghandhara Automobile |
| Khyber Tobacco |
Ghandhara Automobile and Khyber Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghandhara Automobile and Khyber Tobacco
The main advantage of trading using opposite Ghandhara Automobile and Khyber Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghandhara Automobile position performs unexpectedly, Khyber Tobacco 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 Khyber Tobacco will offset losses from the drop in Khyber Tobacco's long position.| Ghandhara Automobile vs. Habib Insurance | Ghandhara Automobile vs. Century Insurance | Ghandhara Automobile vs. Reliance Weaving Mills | Ghandhara Automobile vs. Media Times |
| Khyber Tobacco vs. Habib Insurance | Khyber Tobacco vs. Ghandhara Automobile | Khyber Tobacco vs. Century Insurance | Khyber Tobacco vs. Reliance Weaving Mills |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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