Correlation Between Ittehad Chemicals and Gatron Industries
Can any of the company-specific risk be diversified away by investing in both Ittehad Chemicals and Gatron Industries 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 Gatron Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ittehad Chemicals and Gatron Industries, you can compare the effects of market volatilities on Ittehad Chemicals and Gatron Industries 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 Gatron Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ittehad Chemicals and Gatron Industries.
Diversification Opportunities for Ittehad Chemicals and Gatron Industries
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ittehad and Gatron is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ittehad Chemicals and Gatron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatron Industries 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 Gatron Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatron Industries has no effect on the direction of Ittehad Chemicals i.e., Ittehad Chemicals and Gatron Industries go up and down completely randomly.
Pair Corralation between Ittehad Chemicals and Gatron Industries
Assuming the 90 days trading horizon Ittehad Chemicals is expected to generate 1.57 times more return on investment than Gatron Industries. However, Ittehad Chemicals is 1.57 times more volatile than Gatron Industries. It trades about -0.21 of its potential returns per unit of risk. Gatron Industries is currently generating about -0.35 per unit of risk. If you would invest 7,995 in Ittehad Chemicals on November 4, 2024 and sell it today you would lose (595.00) from holding Ittehad Chemicals or give up 7.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ittehad Chemicals vs. Gatron Industries
Performance |
| Timeline |
| Ittehad Chemicals |
| Gatron Industries |
Ittehad Chemicals and Gatron Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ittehad Chemicals and Gatron Industries
The main advantage of trading using opposite Ittehad Chemicals and Gatron Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ittehad Chemicals position performs unexpectedly, Gatron Industries 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 Gatron Industries will offset losses from the drop in Gatron Industries' long position.| Ittehad Chemicals vs. Mughal Iron Steel | Ittehad Chemicals vs. MCB Investment Manag | Ittehad Chemicals vs. Beco Steel | Ittehad Chemicals vs. Sardar Chemical Industries |
| Gatron Industries vs. Sitara Chemical Industries | Gatron Industries vs. Oil and Gas | Gatron Industries vs. Sindh Modaraba Management | Gatron Industries vs. Sardar Chemical 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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