Correlation Between JS Investments and National Refinery
Can any of the company-specific risk be diversified away by investing in both JS Investments and National Refinery 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 National Refinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Investments and National Refinery, you can compare the effects of market volatilities on JS Investments and National Refinery 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 National Refinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and National Refinery.
Diversification Opportunities for JS Investments and National Refinery
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between JSIL and National is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and National Refinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Refinery 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 National Refinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Refinery has no effect on the direction of JS Investments i.e., JS Investments and National Refinery go up and down completely randomly.
Pair Corralation between JS Investments and National Refinery
Assuming the 90 days trading horizon JS Investments is expected to generate 1.26 times more return on investment than National Refinery. However, JS Investments is 1.26 times more volatile than National Refinery. It trades about 0.06 of its potential returns per unit of risk. National Refinery is currently generating about -0.04 per unit of risk. If you would invest 1,820 in JS Investments on September 3, 2024 and sell it today you would earn a total of 630.00 from holding JS Investments or generate 34.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 82.08% |
| Values | Daily Returns |
JS Investments vs. National Refinery
Performance |
| Timeline |
| JS Investments |
| National Refinery |
JS Investments and National Refinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Investments and National Refinery
The main advantage of trading using opposite JS Investments and National Refinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Investments position performs unexpectedly, National Refinery 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 National Refinery will offset losses from the drop in National Refinery's long position.| JS Investments vs. Meezan Bank | JS Investments vs. Reliance Insurance Co | JS Investments vs. Faysal Bank | JS Investments vs. Packages |
| National Refinery vs. Big Bird Foods | National Refinery vs. Ittehad Chemicals | National Refinery vs. IBL HealthCare | National Refinery vs. Amreli 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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