Correlation Between Ittehad Chemicals and Shifa International
Can any of the company-specific risk be diversified away by investing in both Ittehad Chemicals and Shifa International 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 Shifa International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ittehad Chemicals and Shifa International Hospitals, you can compare the effects of market volatilities on Ittehad Chemicals and Shifa International 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 Shifa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ittehad Chemicals and Shifa International.
Diversification Opportunities for Ittehad Chemicals and Shifa International
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ittehad and Shifa is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ittehad Chemicals and Shifa International Hospitals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shifa International 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 Shifa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shifa International has no effect on the direction of Ittehad Chemicals i.e., Ittehad Chemicals and Shifa International go up and down completely randomly.
Pair Corralation between Ittehad Chemicals and Shifa International
Assuming the 90 days trading horizon Ittehad Chemicals is expected to generate 1.38 times less return on investment than Shifa International. But when comparing it to its historical volatility, Ittehad Chemicals is 1.04 times less risky than Shifa International. It trades about 0.07 of its potential returns per unit of risk. Shifa International Hospitals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 37,316 in Shifa International Hospitals on October 21, 2024 and sell it today you would earn a total of 2,273 from holding Shifa International Hospitals or generate 6.09% 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. Shifa International Hospitals
Performance |
| Timeline |
| Ittehad Chemicals |
| Shifa International |
Ittehad Chemicals and Shifa International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ittehad Chemicals and Shifa International
The main advantage of trading using opposite Ittehad Chemicals and Shifa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ittehad Chemicals position performs unexpectedly, Shifa International 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 Shifa International will offset losses from the drop in Shifa International's long position.| Ittehad Chemicals vs. TPL Insurance | Ittehad Chemicals vs. Quice Food Industries | Ittehad Chemicals vs. Air Link Communication | Ittehad Chemicals vs. Jubilee Life Insurance |
| Shifa International vs. Wah Nobel Chemicals | Shifa International vs. Pakistan Telecommunication | Shifa International vs. Amreli Steels | Shifa International vs. Ittehad Chemicals |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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