Correlation Between Ghandhara Automobile and ORIX Leasing
Can any of the company-specific risk be diversified away by investing in both Ghandhara Automobile and ORIX Leasing 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 ORIX Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ghandhara Automobile and ORIX Leasing Pakistan, you can compare the effects of market volatilities on Ghandhara Automobile and ORIX Leasing 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 ORIX Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghandhara Automobile and ORIX Leasing.
Diversification Opportunities for Ghandhara Automobile and ORIX Leasing
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ghandhara and ORIX is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ghandhara Automobile and ORIX Leasing Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX Leasing Pakistan 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 ORIX Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX Leasing Pakistan has no effect on the direction of Ghandhara Automobile i.e., Ghandhara Automobile and ORIX Leasing go up and down completely randomly.
Pair Corralation between Ghandhara Automobile and ORIX Leasing
Assuming the 90 days trading horizon Ghandhara Automobile is expected to generate 2.05 times more return on investment than ORIX Leasing. However, Ghandhara Automobile is 2.05 times more volatile than ORIX Leasing Pakistan. It trades about 0.55 of its potential returns per unit of risk. ORIX Leasing Pakistan is currently generating about 0.04 per unit of risk. If you would invest 28,712 in Ghandhara Automobile on October 31, 2024 and sell it today you would earn a total of 18,269 from holding Ghandhara Automobile or generate 63.63% 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. ORIX Leasing Pakistan
Performance |
| Timeline |
| Ghandhara Automobile |
| ORIX Leasing Pakistan |
Ghandhara Automobile and ORIX Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghandhara Automobile and ORIX Leasing
The main advantage of trading using opposite Ghandhara Automobile and ORIX Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghandhara Automobile position performs unexpectedly, ORIX Leasing 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 ORIX Leasing will offset losses from the drop in ORIX Leasing's long position.| Ghandhara Automobile vs. Orient Rental Modaraba | Ghandhara Automobile vs. Unilever Pakistan Foods | Ghandhara Automobile vs. Fauji Foods | Ghandhara Automobile vs. Unity Foods |
| ORIX Leasing vs. Jubilee Life Insurance | ORIX Leasing vs. Crescent Star Insurance | ORIX Leasing vs. East West Insurance | ORIX Leasing vs. Bank of Punjab |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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