Correlation Between KSB Pumps and Agha Steel
Can any of the company-specific risk be diversified away by investing in both KSB Pumps and Agha 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 KSB Pumps and Agha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KSB Pumps and Agha Steel Industries, you can compare the effects of market volatilities on KSB Pumps and Agha 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 KSB Pumps with a short position of Agha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of KSB Pumps and Agha Steel.
Diversification Opportunities for KSB Pumps and Agha Steel
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KSB and Agha is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding KSB Pumps and Agha Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agha Steel Industries and KSB Pumps 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 KSB Pumps are associated (or correlated) with Agha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agha Steel Industries has no effect on the direction of KSB Pumps i.e., KSB Pumps and Agha Steel go up and down completely randomly.
Pair Corralation between KSB Pumps and Agha Steel
Assuming the 90 days trading horizon KSB Pumps is expected to generate 0.79 times more return on investment than Agha Steel. However, KSB Pumps is 1.27 times less risky than Agha Steel. It trades about 0.06 of its potential returns per unit of risk. Agha Steel Industries is currently generating about 0.02 per unit of risk. If you would invest 11,935 in KSB Pumps on September 3, 2024 and sell it today you would earn a total of 2,206 from holding KSB Pumps or generate 18.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KSB Pumps vs. Agha Steel Industries
Performance |
| Timeline |
| KSB Pumps |
| Agha Steel Industries |
KSB Pumps and Agha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KSB Pumps and Agha Steel
The main advantage of trading using opposite KSB Pumps and Agha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KSB Pumps position performs unexpectedly, Agha 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 Agha Steel will offset losses from the drop in Agha Steel's long position.| KSB Pumps vs. Masood Textile Mills | KSB Pumps vs. Fauji Foods | KSB Pumps vs. Mari Petroleum | KSB Pumps vs. Loads |
| Agha Steel vs. Habib Insurance | Agha Steel vs. Pakistan Refinery | Agha Steel vs. Century Insurance | Agha Steel vs. Al Khair Gadoon Limited |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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