Correlation Between Ghani Chemical and K Electric
Can any of the company-specific risk be diversified away by investing in both Ghani Chemical and K Electric 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 K Electric 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 K Electric, you can compare the effects of market volatilities on Ghani Chemical and K Electric 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 K Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghani Chemical and K Electric.
Diversification Opportunities for Ghani Chemical and K Electric
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ghani and KEL is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ghani Chemical Industries and K Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Electric 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 K Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Electric has no effect on the direction of Ghani Chemical i.e., Ghani Chemical and K Electric go up and down completely randomly.
Pair Corralation between Ghani Chemical and K Electric
Assuming the 90 days trading horizon Ghani Chemical is expected to generate 1.66 times less return on investment than K Electric. But when comparing it to its historical volatility, Ghani Chemical Industries is 1.24 times less risky than K Electric. It trades about 0.03 of its potential returns per unit of risk. K Electric is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 449.00 in K Electric on September 4, 2024 and sell it today you would earn a total of 129.00 from holding K Electric or generate 28.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.58% |
| Values | Daily Returns |
Ghani Chemical Industries vs. K Electric
Performance |
| Timeline |
| Ghani Chemical Industries |
| K Electric |
Ghani Chemical and K Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghani Chemical and K Electric
The main advantage of trading using opposite Ghani Chemical and K Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghani Chemical position performs unexpectedly, K Electric 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 K Electric will offset losses from the drop in K Electric's long position.| Ghani Chemical vs. Habib Insurance | Ghani Chemical vs. Pakistan Refinery | Ghani Chemical vs. Century Insurance | Ghani Chemical vs. Reliance Weaving Mills |
| K Electric vs. Nimir Industrial Chemical | K Electric vs. Oil and Gas | K Electric vs. ORIX Leasing Pakistan | K Electric vs. Packages |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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