Correlation Between Ghandhara Automobile and Pakistan State
Can any of the company-specific risk be diversified away by investing in both Ghandhara Automobile and Pakistan State 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 Pakistan State into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ghandhara Automobile and Pakistan State Oil, you can compare the effects of market volatilities on Ghandhara Automobile and Pakistan State 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 Pakistan State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghandhara Automobile and Pakistan State.
Diversification Opportunities for Ghandhara Automobile and Pakistan State
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ghandhara and Pakistan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ghandhara Automobile and Pakistan State Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan State Oil 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 Pakistan State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan State Oil has no effect on the direction of Ghandhara Automobile i.e., Ghandhara Automobile and Pakistan State go up and down completely randomly.
Pair Corralation between Ghandhara Automobile and Pakistan State
Assuming the 90 days trading horizon Ghandhara Automobile is expected to generate 1.16 times more return on investment than Pakistan State. However, Ghandhara Automobile is 1.16 times more volatile than Pakistan State Oil. It trades about 0.27 of its potential returns per unit of risk. Pakistan State Oil is currently generating about 0.26 per unit of risk. If you would invest 23,195 in Ghandhara Automobile on October 25, 2024 and sell it today you would earn a total of 20,321 from holding Ghandhara Automobile or generate 87.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Ghandhara Automobile vs. Pakistan State Oil
Performance |
| Timeline |
| Ghandhara Automobile |
| Pakistan State Oil |
Ghandhara Automobile and Pakistan State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghandhara Automobile and Pakistan State
The main advantage of trading using opposite Ghandhara Automobile and Pakistan State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghandhara Automobile position performs unexpectedly, Pakistan State 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 Pakistan State will offset losses from the drop in Pakistan State's long position.| Ghandhara Automobile vs. JS Investments | Ghandhara Automobile vs. NetSol Technologies | Ghandhara Automobile vs. Mughal Iron Steel | Ghandhara Automobile vs. MCB Investment Manag |
| Pakistan State vs. Shaheen Insurance | Pakistan State vs. Adamjee Insurance | Pakistan State vs. Universal Insurance | Pakistan State vs. Ghandhara Automobile |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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