Correlation Between Hinopak Motors and Al Ghazi
Can any of the company-specific risk be diversified away by investing in both Hinopak Motors and Al Ghazi 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 Hinopak Motors and Al Ghazi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hinopak Motors and Al Ghazi Tractors, you can compare the effects of market volatilities on Hinopak Motors and Al Ghazi 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 Hinopak Motors with a short position of Al Ghazi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hinopak Motors and Al Ghazi.
Diversification Opportunities for Hinopak Motors and Al Ghazi
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hinopak and AGTL is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hinopak Motors and Al Ghazi Tractors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Ghazi Tractors and Hinopak Motors 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 Hinopak Motors are associated (or correlated) with Al Ghazi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Ghazi Tractors has no effect on the direction of Hinopak Motors i.e., Hinopak Motors and Al Ghazi go up and down completely randomly.
Pair Corralation between Hinopak Motors and Al Ghazi
Assuming the 90 days trading horizon Hinopak Motors is expected to generate 1.28 times more return on investment than Al Ghazi. However, Hinopak Motors is 1.28 times more volatile than Al Ghazi Tractors. It trades about 0.03 of its potential returns per unit of risk. Al Ghazi Tractors is currently generating about -0.1 per unit of risk. If you would invest 28,851 in Hinopak Motors on August 31, 2024 and sell it today you would earn a total of 315.00 from holding Hinopak Motors or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hinopak Motors vs. Al Ghazi Tractors
Performance |
| Timeline |
| Hinopak Motors |
| Al Ghazi Tractors |
Hinopak Motors and Al Ghazi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hinopak Motors and Al Ghazi
The main advantage of trading using opposite Hinopak Motors and Al Ghazi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hinopak Motors position performs unexpectedly, Al Ghazi 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 Al Ghazi will offset losses from the drop in Al Ghazi's long position.| Hinopak Motors vs. Masood Textile Mills | Hinopak Motors vs. Fauji Foods | Hinopak Motors vs. KSB Pumps | Hinopak Motors vs. Mari Petroleum |
| Al Ghazi vs. Synthetic Products Enterprises | Al Ghazi vs. Aisha Steel Mills | Al Ghazi vs. Sitara Chemical Industries | Al Ghazi vs. Agha Steel Industries |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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