Correlation Between International Steels and First Al
Can any of the company-specific risk be diversified away by investing in both International Steels and First Al 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 International Steels and First Al into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Steels and First Al Noor Modaraba, you can compare the effects of market volatilities on International Steels and First Al 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 International Steels with a short position of First Al. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Steels and First Al.
Diversification Opportunities for International Steels and First Al
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and First is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding International Steels and First Al Noor Modaraba in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Al Noor and International Steels 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 International Steels are associated (or correlated) with First Al. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Al Noor has no effect on the direction of International Steels i.e., International Steels and First Al go up and down completely randomly.
Pair Corralation between International Steels and First Al
Assuming the 90 days trading horizon International Steels is expected to generate 0.33 times more return on investment than First Al. However, International Steels is 2.99 times less risky than First Al. It trades about 0.09 of its potential returns per unit of risk. First Al Noor Modaraba is currently generating about 0.02 per unit of risk. If you would invest 4,148 in International Steels on September 12, 2024 and sell it today you would earn a total of 4,120 from holding International Steels or generate 99.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 39.65% |
| Values | Daily Returns |
International Steels vs. First Al Noor Modaraba
Performance |
| Timeline |
| International Steels |
| First Al Noor |
International Steels and First Al Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Steels and First Al
The main advantage of trading using opposite International Steels and First Al positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Steels position performs unexpectedly, First Al 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 First Al will offset losses from the drop in First Al's long position.| International Steels vs. Masood Textile Mills | International Steels vs. Fauji Foods | International Steels vs. KSB Pumps | International Steels vs. Mari Petroleum |
| First Al vs. Security Investment Bank | First Al vs. Dost Steels | First Al vs. ITTEFAQ Iron Industries | First Al vs. International Steels |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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