Correlation Between Gul Ahmed and Amreli Steels
Can any of the company-specific risk be diversified away by investing in both Gul Ahmed and Amreli Steels 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 Gul Ahmed and Amreli Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gul Ahmed Textile and Amreli Steels, you can compare the effects of market volatilities on Gul Ahmed and Amreli Steels 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 Gul Ahmed with a short position of Amreli Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gul Ahmed and Amreli Steels.
Diversification Opportunities for Gul Ahmed and Amreli Steels
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gul and Amreli is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Gul Ahmed Textile and Amreli Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amreli Steels and Gul Ahmed 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 Gul Ahmed Textile are associated (or correlated) with Amreli Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amreli Steels has no effect on the direction of Gul Ahmed i.e., Gul Ahmed and Amreli Steels go up and down completely randomly.
Pair Corralation between Gul Ahmed and Amreli Steels
Assuming the 90 days trading horizon Gul Ahmed Textile is expected to generate 0.65 times more return on investment than Amreli Steels. However, Gul Ahmed Textile is 1.54 times less risky than Amreli Steels. It trades about 0.1 of its potential returns per unit of risk. Amreli Steels is currently generating about -0.07 per unit of risk. If you would invest 1,871 in Gul Ahmed Textile on August 28, 2024 and sell it today you would earn a total of 237.00 from holding Gul Ahmed Textile or generate 12.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gul Ahmed Textile vs. Amreli Steels
Performance |
| Timeline |
| Gul Ahmed Textile |
| Amreli Steels |
Gul Ahmed and Amreli Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gul Ahmed and Amreli Steels
The main advantage of trading using opposite Gul Ahmed and Amreli Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gul Ahmed position performs unexpectedly, Amreli Steels 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 Amreli Steels will offset losses from the drop in Amreli Steels' long position.| Gul Ahmed vs. Masood Textile Mills | Gul Ahmed vs. Fauji Foods | Gul Ahmed vs. KSB Pumps | Gul Ahmed vs. Mari Petroleum |
| Amreli Steels vs. Oil and Gas | Amreli Steels vs. Pakistan State Oil | Amreli Steels vs. Pakistan Petroleum | Amreli Steels vs. Engro |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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