Correlation Between Hi Tech and Shifa International
Can any of the company-specific risk be diversified away by investing in both Hi Tech and Shifa International 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 Hi Tech and Shifa International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hi Tech Lubricants and Shifa International Hospitals, you can compare the effects of market volatilities on Hi Tech and Shifa International 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 Hi Tech with a short position of Shifa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Tech and Shifa International.
Diversification Opportunities for Hi Tech and Shifa International
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between HTL and Shifa is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hi Tech Lubricants and Shifa International Hospitals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shifa International and Hi Tech 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 Hi Tech Lubricants are associated (or correlated) with Shifa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shifa International has no effect on the direction of Hi Tech i.e., Hi Tech and Shifa International go up and down completely randomly.
Pair Corralation between Hi Tech and Shifa International
Assuming the 90 days trading horizon Hi Tech Lubricants is expected to under-perform the Shifa International. But the stock apears to be less risky and, when comparing its historical volatility, Hi Tech Lubricants is 1.2 times less risky than Shifa International. The stock trades about -0.05 of its potential returns per unit of risk. The Shifa International Hospitals is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 42,519 in Shifa International Hospitals on November 28, 2024 and sell it today you would earn a total of 8,543 from holding Shifa International Hospitals or generate 20.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hi Tech Lubricants vs. Shifa International Hospitals
Performance |
| Timeline |
| Hi Tech Lubricants |
| Shifa International |
Hi Tech and Shifa International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hi Tech and Shifa International
The main advantage of trading using opposite Hi Tech and Shifa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Tech position performs unexpectedly, Shifa International 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 Shifa International will offset losses from the drop in Shifa International's long position.| Hi Tech vs. Pakistan Synthetics | Hi Tech vs. 786 Investment Limited | Hi Tech vs. ITTEFAQ Iron Industries | Hi Tech vs. WorldCall Telecom |
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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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