Correlation Between IBL HealthCare and Ghani Chemical
Can any of the company-specific risk be diversified away by investing in both IBL HealthCare and Ghani Chemical 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 IBL HealthCare and Ghani Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBL HealthCare and Ghani Chemical Industries, you can compare the effects of market volatilities on IBL HealthCare and Ghani Chemical 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 IBL HealthCare with a short position of Ghani Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBL HealthCare and Ghani Chemical.
Diversification Opportunities for IBL HealthCare and Ghani Chemical
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IBL and Ghani is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding IBL HealthCare and Ghani Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ghani Chemical Industries and IBL HealthCare 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 IBL HealthCare are associated (or correlated) with Ghani Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ghani Chemical Industries has no effect on the direction of IBL HealthCare i.e., IBL HealthCare and Ghani Chemical go up and down completely randomly.
Pair Corralation between IBL HealthCare and Ghani Chemical
Assuming the 90 days trading horizon IBL HealthCare is expected to generate 1.05 times more return on investment than Ghani Chemical. However, IBL HealthCare is 1.05 times more volatile than Ghani Chemical Industries. It trades about 0.3 of its potential returns per unit of risk. Ghani Chemical Industries is currently generating about 0.2 per unit of risk. If you would invest 2,934 in IBL HealthCare on August 30, 2024 and sell it today you would earn a total of 943.00 from holding IBL HealthCare or generate 32.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IBL HealthCare vs. Ghani Chemical Industries
Performance |
| Timeline |
| IBL HealthCare |
| Ghani Chemical Industries |
IBL HealthCare and Ghani Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IBL HealthCare and Ghani Chemical
The main advantage of trading using opposite IBL HealthCare and Ghani Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBL HealthCare position performs unexpectedly, Ghani Chemical 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 Ghani Chemical will offset losses from the drop in Ghani Chemical's long position.| IBL HealthCare vs. Masood Textile Mills | IBL HealthCare vs. Fauji Foods | IBL HealthCare vs. KSB Pumps | IBL HealthCare vs. Mari Petroleum |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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