Correlation Between Hub Power and Gul Ahmed
Can any of the company-specific risk be diversified away by investing in both Hub Power and Gul Ahmed 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 Hub Power and Gul Ahmed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hub Power and Gul Ahmed Textile, you can compare the effects of market volatilities on Hub Power and Gul Ahmed 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 Hub Power with a short position of Gul Ahmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hub Power and Gul Ahmed.
Diversification Opportunities for Hub Power and Gul Ahmed
Pay attention - limited upside
The 3 months correlation between Hub and Gul is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hub Power and Gul Ahmed Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gul Ahmed Textile and Hub Power 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 Hub Power are associated (or correlated) with Gul Ahmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gul Ahmed Textile has no effect on the direction of Hub Power i.e., Hub Power and Gul Ahmed go up and down completely randomly.
Pair Corralation between Hub Power and Gul Ahmed
Assuming the 90 days trading horizon Hub Power is expected to under-perform the Gul Ahmed. In addition to that, Hub Power is 1.27 times more volatile than Gul Ahmed Textile. It trades about -0.05 of its total potential returns per unit of risk. Gul Ahmed Textile is currently generating about 0.01 per unit of volatility. If you would invest 2,125 in Gul Ahmed Textile on August 28, 2024 and sell it today you would lose (17.00) from holding Gul Ahmed Textile or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hub Power vs. Gul Ahmed Textile
Performance |
| Timeline |
| Hub Power |
| Gul Ahmed Textile |
Hub Power and Gul Ahmed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hub Power and Gul Ahmed
The main advantage of trading using opposite Hub Power and Gul Ahmed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hub Power position performs unexpectedly, Gul Ahmed 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 Gul Ahmed will offset losses from the drop in Gul Ahmed's long position.| Hub Power vs. Pakistan State Oil | Hub Power vs. Oil and Gas | Hub Power vs. Lucky Cement | Hub Power vs. Engro |
| Gul Ahmed vs. Masood Textile Mills | Gul Ahmed vs. Fauji Foods | Gul Ahmed vs. KSB Pumps | Gul Ahmed 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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