Correlation Between Ghani Chemical and National Bank
Can any of the company-specific risk be diversified away by investing in both Ghani Chemical and National Bank 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 National Bank 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 National Bank of, you can compare the effects of market volatilities on Ghani Chemical and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghani Chemical and National Bank.
Diversification Opportunities for Ghani Chemical and National Bank
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ghani and National is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ghani Chemical Industries and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Ghani Chemical i.e., Ghani Chemical and National Bank go up and down completely randomly.
Pair Corralation between Ghani Chemical and National Bank
Assuming the 90 days trading horizon Ghani Chemical is expected to generate 114.84 times less return on investment than National Bank. In addition to that, Ghani Chemical is 1.26 times more volatile than National Bank of. It trades about 0.0 of its total potential returns per unit of risk. National Bank of is currently generating about 0.1 per unit of volatility. If you would invest 2,494 in National Bank of on August 25, 2024 and sell it today you would earn a total of 3,857 from holding National Bank of or generate 154.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ghani Chemical Industries vs. National Bank of
Performance |
| Timeline |
| Ghani Chemical Industries |
| National Bank |
Ghani Chemical and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghani Chemical and National Bank
The main advantage of trading using opposite Ghani Chemical and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghani Chemical position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Ghani Chemical vs. MCB Investment Manag | Ghani Chemical vs. Air Link Communication | Ghani Chemical vs. Pak Gulf Leasing | Ghani Chemical vs. Synthetic Products Enterprises |
| National Bank vs. Masood Textile Mills | National Bank vs. Fauji Foods | National Bank vs. KSB Pumps | National Bank 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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