Correlation Between Ghandhara Automobile and Orient Rental
Can any of the company-specific risk be diversified away by investing in both Ghandhara Automobile and Orient Rental 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 Orient Rental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ghandhara Automobile and Orient Rental Modaraba, you can compare the effects of market volatilities on Ghandhara Automobile and Orient Rental 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 Orient Rental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghandhara Automobile and Orient Rental.
Diversification Opportunities for Ghandhara Automobile and Orient Rental
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ghandhara and Orient is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ghandhara Automobile and Orient Rental Modaraba in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Rental Modaraba 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 Orient Rental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Rental Modaraba has no effect on the direction of Ghandhara Automobile i.e., Ghandhara Automobile and Orient Rental go up and down completely randomly.
Pair Corralation between Ghandhara Automobile and Orient Rental
Assuming the 90 days trading horizon Ghandhara Automobile is expected to generate 2.09 times more return on investment than Orient Rental. However, Ghandhara Automobile is 2.09 times more volatile than Orient Rental Modaraba. It trades about 0.49 of its potential returns per unit of risk. Orient Rental Modaraba is currently generating about 0.02 per unit of risk. If you would invest 30,314 in Ghandhara Automobile on November 4, 2024 and sell it today you would earn a total of 16,490 from holding Ghandhara Automobile or generate 54.4% 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. Orient Rental Modaraba
Performance |
| Timeline |
| Ghandhara Automobile |
| Orient Rental Modaraba |
Ghandhara Automobile and Orient Rental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghandhara Automobile and Orient Rental
The main advantage of trading using opposite Ghandhara Automobile and Orient Rental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghandhara Automobile position performs unexpectedly, Orient Rental 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 Orient Rental will offset losses from the drop in Orient Rental'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 |
| Orient Rental vs. Adamjee Insurance | Orient Rental vs. Oil and Gas | Orient Rental vs. Soneri Bank | Orient Rental vs. MCB Investment Manag |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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