Correlation Between JS Investments and Amreli Steels
Can any of the company-specific risk be diversified away by investing in both JS Investments and Amreli 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 JS Investments and Amreli Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Investments and Amreli Steels, you can compare the effects of market volatilities on JS Investments and Amreli 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 JS Investments with a short position of Amreli Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and Amreli Steels.
Diversification Opportunities for JS Investments and Amreli Steels
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JSIL and Amreli is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Amreli Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amreli Steels and JS Investments 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 Investments are associated (or correlated) with Amreli Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amreli Steels has no effect on the direction of JS Investments i.e., JS Investments and Amreli Steels go up and down completely randomly.
Pair Corralation between JS Investments and Amreli Steels
Assuming the 90 days trading horizon JS Investments is expected to generate 2.37 times less return on investment than Amreli Steels. In addition to that, JS Investments is 1.29 times more volatile than Amreli Steels. It trades about 0.06 of its total potential returns per unit of risk. Amreli Steels is currently generating about 0.17 per unit of volatility. If you would invest 1,956 in Amreli Steels on August 28, 2024 and sell it today you would earn a total of 165.00 from holding Amreli Steels or generate 8.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JS Investments vs. Amreli Steels
Performance |
| Timeline |
| JS Investments |
| Amreli Steels |
JS Investments and Amreli Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Investments and Amreli Steels
The main advantage of trading using opposite JS Investments and Amreli Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Investments position performs unexpectedly, Amreli 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 Amreli Steels will offset losses from the drop in Amreli Steels' long position.| JS Investments vs. Masood Textile Mills | JS Investments vs. Fauji Foods | JS Investments vs. KSB Pumps | JS Investments vs. Mari Petroleum |
| Amreli Steels vs. Oil and Gas | Amreli Steels vs. Pakistan State Oil | Amreli Steels vs. Pakistan Petroleum | Amreli Steels vs. Engro |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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