Correlation Between Ghani Chemical and Pakistan Synthetics
Can any of the company-specific risk be diversified away by investing in both Ghani Chemical and Pakistan Synthetics 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 Pakistan Synthetics 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 Pakistan Synthetics, you can compare the effects of market volatilities on Ghani Chemical and Pakistan Synthetics 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 Pakistan Synthetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghani Chemical and Pakistan Synthetics.
Diversification Opportunities for Ghani Chemical and Pakistan Synthetics
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ghani and Pakistan is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ghani Chemical Industries and Pakistan Synthetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Synthetics 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 Pakistan Synthetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Synthetics has no effect on the direction of Ghani Chemical i.e., Ghani Chemical and Pakistan Synthetics go up and down completely randomly.
Pair Corralation between Ghani Chemical and Pakistan Synthetics
Assuming the 90 days trading horizon Ghani Chemical Industries is expected to generate 1.46 times more return on investment than Pakistan Synthetics. However, Ghani Chemical is 1.46 times more volatile than Pakistan Synthetics. It trades about 0.21 of its potential returns per unit of risk. Pakistan Synthetics is currently generating about 0.21 per unit of risk. If you would invest 1,126 in Ghani Chemical Industries on August 29, 2024 and sell it today you would earn a total of 231.00 from holding Ghani Chemical Industries or generate 20.52% 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. Pakistan Synthetics
Performance |
| Timeline |
| Ghani Chemical Industries |
| Pakistan Synthetics |
Ghani Chemical and Pakistan Synthetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghani Chemical and Pakistan Synthetics
The main advantage of trading using opposite Ghani Chemical and Pakistan Synthetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghani Chemical position performs unexpectedly, Pakistan Synthetics 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 Synthetics will offset losses from the drop in Pakistan Synthetics' long position.| Ghani Chemical vs. Habib Insurance | Ghani Chemical vs. Century Insurance | Ghani Chemical vs. Reliance Weaving Mills | Ghani Chemical vs. Media Times |
| Pakistan Synthetics vs. Masood Textile Mills | Pakistan Synthetics vs. Fauji Foods | Pakistan Synthetics vs. KSB Pumps | Pakistan Synthetics 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |