Correlation Between JS Investments and Pakistan Aluminium
Can any of the company-specific risk be diversified away by investing in both JS Investments and Pakistan Aluminium 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 Pakistan Aluminium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JS Investments and Pakistan Aluminium Beverage, you can compare the effects of market volatilities on JS Investments and Pakistan Aluminium 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 Pakistan Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of JS Investments and Pakistan Aluminium.
Diversification Opportunities for JS Investments and Pakistan Aluminium
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JSIL and Pakistan is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Pakistan Aluminium Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Aluminium 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 Pakistan Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Aluminium has no effect on the direction of JS Investments i.e., JS Investments and Pakistan Aluminium go up and down completely randomly.
Pair Corralation between JS Investments and Pakistan Aluminium
Assuming the 90 days trading horizon JS Investments is expected to generate 1.89 times more return on investment than Pakistan Aluminium. However, JS Investments is 1.89 times more volatile than Pakistan Aluminium Beverage. It trades about -0.07 of its potential returns per unit of risk. Pakistan Aluminium Beverage is currently generating about -0.17 per unit of risk. If you would invest 2,360 in JS Investments on November 9, 2024 and sell it today you would lose (160.00) from holding JS Investments or give up 6.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
JS Investments vs. Pakistan Aluminium Beverage
Performance |
| Timeline |
| JS Investments |
| Pakistan Aluminium |
JS Investments and Pakistan Aluminium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JS Investments and Pakistan Aluminium
The main advantage of trading using opposite JS Investments and Pakistan Aluminium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JS Investments position performs unexpectedly, Pakistan Aluminium 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 Pakistan Aluminium will offset losses from the drop in Pakistan Aluminium's long position.| JS Investments vs. Grays Leasing | JS Investments vs. Nimir Industrial Chemical | JS Investments vs. Ittehad Chemicals | JS Investments vs. Lotte Chemical Pakistan |
| Pakistan Aluminium vs. IGI Life Insurance | Pakistan Aluminium vs. Adamjee Insurance | Pakistan Aluminium vs. Sitara Chemical Industries | Pakistan Aluminium vs. ORIX Leasing Pakistan |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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