Correlation Between JS Investments and Ittehad Chemicals
Can any of the company-specific risk be diversified away by investing in both JS Investments and Ittehad Chemicals 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 Ittehad Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Investments and Ittehad Chemicals, you can compare the effects of market volatilities on JS Investments and Ittehad Chemicals 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 Ittehad Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and Ittehad Chemicals.
Diversification Opportunities for JS Investments and Ittehad Chemicals
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JSIL and Ittehad is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Ittehad Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ittehad Chemicals 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 Ittehad Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ittehad Chemicals has no effect on the direction of JS Investments i.e., JS Investments and Ittehad Chemicals go up and down completely randomly.
Pair Corralation between JS Investments and Ittehad Chemicals
Assuming the 90 days trading horizon JS Investments is expected to under-perform the Ittehad Chemicals. In addition to that, JS Investments is 1.36 times more volatile than Ittehad Chemicals. It trades about -0.05 of its total potential returns per unit of risk. Ittehad Chemicals is currently generating about 0.12 per unit of volatility. If you would invest 6,857 in Ittehad Chemicals on October 26, 2024 and sell it today you would earn a total of 472.00 from holding Ittehad Chemicals or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
JS Investments vs. Ittehad Chemicals
Performance |
| Timeline |
| JS Investments |
| Ittehad Chemicals |
JS Investments and Ittehad Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Investments and Ittehad Chemicals
The main advantage of trading using opposite JS Investments and Ittehad Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Investments position performs unexpectedly, Ittehad Chemicals 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 Ittehad Chemicals will offset losses from the drop in Ittehad Chemicals' long position.| JS Investments vs. Shaheen Insurance | JS Investments vs. Pakistan Telecommunication | JS Investments vs. WorldCall Telecom | JS Investments vs. Nimir Industrial Chemical |
| Ittehad Chemicals vs. JS Investments | Ittehad Chemicals vs. Packages | Ittehad Chemicals vs. Ghandhara Automobile | Ittehad Chemicals vs. Bawany Air Products |
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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