Correlation Between JS Bank and Ghani Chemical
Can any of the company-specific risk be diversified away by investing in both JS Bank and Ghani Chemical 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 JS Bank and Ghani Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Bank and Ghani Chemical Industries, you can compare the effects of market volatilities on JS Bank and Ghani Chemical 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 JS Bank with a short position of Ghani Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Bank and Ghani Chemical.
Diversification Opportunities for JS Bank and Ghani Chemical
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JSBL and Ghani is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding JS Bank and Ghani Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ghani Chemical Industries and JS Bank 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 JS Bank are associated (or correlated) with Ghani Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ghani Chemical Industries has no effect on the direction of JS Bank i.e., JS Bank and Ghani Chemical go up and down completely randomly.
Pair Corralation between JS Bank and Ghani Chemical
Assuming the 90 days trading horizon JS Bank is expected to generate 0.71 times more return on investment than Ghani Chemical. However, JS Bank is 1.42 times less risky than Ghani Chemical. It trades about 0.18 of its potential returns per unit of risk. Ghani Chemical Industries is currently generating about 0.07 per unit of risk. If you would invest 935.00 in JS Bank on November 4, 2024 and sell it today you would earn a total of 131.00 from holding JS Bank or generate 14.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JS Bank vs. Ghani Chemical Industries
Performance |
| Timeline |
| JS Bank |
| Ghani Chemical Industries |
JS Bank and Ghani Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Bank and Ghani Chemical
The main advantage of trading using opposite JS Bank and Ghani Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Bank position performs unexpectedly, Ghani Chemical 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 Ghani Chemical will offset losses from the drop in Ghani Chemical's long position.| JS Bank vs. Ghandhara Automobile | JS Bank vs. Crescent Star Insurance | JS Bank vs. United Insurance | JS Bank vs. Habib Insurance |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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