Correlation Between International Steels and Unilever Pakistan
Can any of the company-specific risk be diversified away by investing in both International Steels and Unilever Pakistan 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 Unilever Pakistan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Steels and Unilever Pakistan Foods, you can compare the effects of market volatilities on International Steels and Unilever Pakistan 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 Unilever Pakistan. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Steels and Unilever Pakistan.
Diversification Opportunities for International Steels and Unilever Pakistan
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between International and Unilever is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding International Steels and Unilever Pakistan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever Pakistan Foods 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 Unilever Pakistan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever Pakistan Foods has no effect on the direction of International Steels i.e., International Steels and Unilever Pakistan go up and down completely randomly.
Pair Corralation between International Steels and Unilever Pakistan
Assuming the 90 days trading horizon International Steels is expected to generate 2.59 times more return on investment than Unilever Pakistan. However, International Steels is 2.59 times more volatile than Unilever Pakistan Foods. It trades about 0.13 of its potential returns per unit of risk. Unilever Pakistan Foods is currently generating about 0.21 per unit of risk. If you would invest 8,604 in International Steels on October 25, 2024 and sell it today you would earn a total of 571.00 from holding International Steels or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Steels vs. Unilever Pakistan Foods
Performance |
| Timeline |
| International Steels |
| Unilever Pakistan Foods |
International Steels and Unilever Pakistan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Steels and Unilever Pakistan
The main advantage of trading using opposite International Steels and Unilever Pakistan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Steels position performs unexpectedly, Unilever Pakistan 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 Unilever Pakistan will offset losses from the drop in Unilever Pakistan's long position.| International Steels vs. JS Investments | International Steels vs. Bank of Punjab | International Steels vs. Sardar Chemical Industries | International Steels vs. Synthetic Products Enterprises |
| Unilever Pakistan vs. TPL Insurance | Unilever Pakistan vs. Allied Bank | Unilever Pakistan vs. Soneri Bank | Unilever Pakistan vs. Century 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |