Correlation Between Khyber Tobacco and Beco Steel
Can any of the company-specific risk be diversified away by investing in both Khyber Tobacco and Beco Steel 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 Khyber Tobacco and Beco Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Khyber Tobacco and Beco Steel, you can compare the effects of market volatilities on Khyber Tobacco and Beco Steel 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 Khyber Tobacco with a short position of Beco Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Khyber Tobacco and Beco Steel.
Diversification Opportunities for Khyber Tobacco and Beco Steel
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Khyber and Beco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Khyber Tobacco and Beco Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beco Steel and Khyber Tobacco 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 Khyber Tobacco are associated (or correlated) with Beco Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beco Steel has no effect on the direction of Khyber Tobacco i.e., Khyber Tobacco and Beco Steel go up and down completely randomly.
Pair Corralation between Khyber Tobacco and Beco Steel
Assuming the 90 days trading horizon Khyber Tobacco is expected to under-perform the Beco Steel. But the stock apears to be less risky and, when comparing its historical volatility, Khyber Tobacco is 1.87 times less risky than Beco Steel. The stock trades about -0.04 of its potential returns per unit of risk. The Beco Steel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 620.00 in Beco Steel on September 13, 2024 and sell it today you would earn a total of 222.00 from holding Beco Steel or generate 35.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.17% |
| Values | Daily Returns |
Khyber Tobacco vs. Beco Steel
Performance |
| Timeline |
| Khyber Tobacco |
| Beco Steel |
Khyber Tobacco and Beco Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Khyber Tobacco and Beco Steel
The main advantage of trading using opposite Khyber Tobacco and Beco Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Khyber Tobacco position performs unexpectedly, Beco Steel 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 Beco Steel will offset losses from the drop in Beco Steel's long position.| Khyber Tobacco vs. Askari Bank | Khyber Tobacco vs. TPL Insurance | Khyber Tobacco vs. Atlas Insurance | Khyber Tobacco vs. Habib Insurance |
| Beco Steel vs. Habib Insurance | Beco Steel vs. Ghandhara Automobile | Beco Steel vs. Century Insurance | Beco Steel vs. Reliance Weaving Mills |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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