Correlation Between Ghani Chemical and Adamjee Insurance
Can any of the company-specific risk be diversified away by investing in both Ghani Chemical and Adamjee Insurance 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 Ghani Chemical and Adamjee Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ghani Chemical Industries and Adamjee Insurance, you can compare the effects of market volatilities on Ghani Chemical and Adamjee Insurance 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 Ghani Chemical with a short position of Adamjee Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghani Chemical and Adamjee Insurance.
Diversification Opportunities for Ghani Chemical and Adamjee Insurance
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ghani and Adamjee is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ghani Chemical Industries and Adamjee Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamjee Insurance and Ghani Chemical 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 Ghani Chemical Industries are associated (or correlated) with Adamjee Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adamjee Insurance has no effect on the direction of Ghani Chemical i.e., Ghani Chemical and Adamjee Insurance go up and down completely randomly.
Pair Corralation between Ghani Chemical and Adamjee Insurance
Assuming the 90 days trading horizon Ghani Chemical Industries is expected to generate 1.78 times more return on investment than Adamjee Insurance. However, Ghani Chemical is 1.78 times more volatile than Adamjee Insurance. It trades about 0.2 of its potential returns per unit of risk. Adamjee Insurance is currently generating about 0.08 per unit of risk. If you would invest 1,166 in Ghani Chemical Industries on August 30, 2024 and sell it today you would earn a total of 219.00 from holding Ghani Chemical Industries or generate 18.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ghani Chemical Industries vs. Adamjee Insurance
Performance |
| Timeline |
| Ghani Chemical Industries |
| Adamjee Insurance |
Ghani Chemical and Adamjee Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghani Chemical and Adamjee Insurance
The main advantage of trading using opposite Ghani Chemical and Adamjee Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghani Chemical position performs unexpectedly, Adamjee Insurance 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 Adamjee Insurance will offset losses from the drop in Adamjee Insurance's long position.| Ghani Chemical vs. Escorts Investment Bank | Ghani Chemical vs. Atlas Insurance | Ghani Chemical vs. Unity Foods | Ghani Chemical vs. Security Investment Bank |
| Adamjee Insurance vs. Masood Textile Mills | Adamjee Insurance vs. Fauji Foods | Adamjee Insurance vs. KSB Pumps | Adamjee Insurance vs. Mari Petroleum |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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