Correlation Between Ittehad Chemicals and EFU General
Can any of the company-specific risk be diversified away by investing in both Ittehad Chemicals and EFU General 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 Ittehad Chemicals and EFU General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ittehad Chemicals and EFU General Insurance, you can compare the effects of market volatilities on Ittehad Chemicals and EFU General 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 Ittehad Chemicals with a short position of EFU General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ittehad Chemicals and EFU General.
Diversification Opportunities for Ittehad Chemicals and EFU General
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ittehad and EFU is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ittehad Chemicals and EFU General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFU General Insurance and Ittehad Chemicals 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 Ittehad Chemicals are associated (or correlated) with EFU General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFU General Insurance has no effect on the direction of Ittehad Chemicals i.e., Ittehad Chemicals and EFU General go up and down completely randomly.
Pair Corralation between Ittehad Chemicals and EFU General
Assuming the 90 days trading horizon Ittehad Chemicals is expected to generate 1.03 times more return on investment than EFU General. However, Ittehad Chemicals is 1.03 times more volatile than EFU General Insurance. It trades about 0.07 of its potential returns per unit of risk. EFU General Insurance is currently generating about -0.08 per unit of risk. If you would invest 6,857 in Ittehad Chemicals on October 26, 2024 and sell it today you would earn a total of 242.00 from holding Ittehad Chemicals or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ittehad Chemicals vs. EFU General Insurance
Performance |
| Timeline |
| Ittehad Chemicals |
| EFU General Insurance |
Ittehad Chemicals and EFU General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ittehad Chemicals and EFU General
The main advantage of trading using opposite Ittehad Chemicals and EFU General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ittehad Chemicals position performs unexpectedly, EFU General 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 EFU General will offset losses from the drop in EFU General's long position.| Ittehad Chemicals vs. JS Investments | Ittehad Chemicals vs. Packages | Ittehad Chemicals vs. Ghandhara Automobile | Ittehad Chemicals vs. Bawany Air Products |
| EFU General vs. Ittehad Chemicals | EFU General vs. Hi Tech Lubricants | EFU General vs. Jubilee Life Insurance | EFU General vs. Fateh Sports Wear |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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