Correlation Between Ittehad Chemicals and International Steels
Can any of the company-specific risk be diversified away by investing in both Ittehad Chemicals and International Steels 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 International Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ittehad Chemicals and International Steels, you can compare the effects of market volatilities on Ittehad Chemicals and International Steels 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 International Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ittehad Chemicals and International Steels.
Diversification Opportunities for Ittehad Chemicals and International Steels
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ittehad and International is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ittehad Chemicals and International Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Steels 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 International Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Steels has no effect on the direction of Ittehad Chemicals i.e., Ittehad Chemicals and International Steels go up and down completely randomly.
Pair Corralation between Ittehad Chemicals and International Steels
Assuming the 90 days trading horizon Ittehad Chemicals is expected to generate 0.93 times more return on investment than International Steels. However, Ittehad Chemicals is 1.08 times less risky than International Steels. It trades about 0.11 of its potential returns per unit of risk. International Steels is currently generating about 0.09 per unit of risk. If you would invest 2,693 in Ittehad Chemicals on November 4, 2024 and sell it today you would earn a total of 4,707 from holding Ittehad Chemicals or generate 174.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.31% |
| Values | Daily Returns |
Ittehad Chemicals vs. International Steels
Performance |
| Timeline |
| Ittehad Chemicals |
| International Steels |
Ittehad Chemicals and International Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ittehad Chemicals and International Steels
The main advantage of trading using opposite Ittehad Chemicals and International Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ittehad Chemicals position performs unexpectedly, International Steels 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 International Steels will offset losses from the drop in International Steels' 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 |
| International Steels vs. Allied Bank | International Steels vs. MCB Bank | International Steels vs. Dost Steels | International Steels vs. Crescent Star Insurance |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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