Correlation Between Ghani Chemical and TPL Insurance
Can any of the company-specific risk be diversified away by investing in both Ghani Chemical and TPL 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 TPL 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 TPL Insurance, you can compare the effects of market volatilities on Ghani Chemical and TPL 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 TPL Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ghani Chemical and TPL Insurance.
Diversification Opportunities for Ghani Chemical and TPL Insurance
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ghani and TPL is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ghani Chemical Industries and TPL Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPL 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 TPL Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPL Insurance has no effect on the direction of Ghani Chemical i.e., Ghani Chemical and TPL Insurance go up and down completely randomly.
Pair Corralation between Ghani Chemical and TPL Insurance
Assuming the 90 days trading horizon Ghani Chemical Industries is expected to generate 1.06 times more return on investment than TPL Insurance. However, Ghani Chemical is 1.06 times more volatile than TPL Insurance. It trades about 0.01 of its potential returns per unit of risk. TPL Insurance is currently generating about -0.01 per unit of risk. If you would invest 1,591 in Ghani Chemical Industries on September 3, 2024 and sell it today you would lose (124.00) from holding Ghani Chemical Industries or give up 7.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.85% |
| Values | Daily Returns |
Ghani Chemical Industries vs. TPL Insurance
Performance |
| Timeline |
| Ghani Chemical Industries |
| TPL Insurance |
Ghani Chemical and TPL Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ghani Chemical and TPL Insurance
The main advantage of trading using opposite Ghani Chemical and TPL Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ghani Chemical position performs unexpectedly, TPL 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 TPL Insurance will offset losses from the drop in TPL Insurance's long position.| Ghani Chemical vs. Packages | Ghani Chemical vs. Pakistan Aluminium Beverage | Ghani Chemical vs. MCB Investment Manag | Ghani Chemical vs. Big Bird Foods |
| TPL Insurance vs. Ghandhara Automobile | TPL Insurance vs. IBL HealthCare | TPL Insurance vs. Pak Datacom | TPL Insurance vs. Pakistan Hotel Developers |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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