Correlation Between Loads and Gul Ahmed
Can any of the company-specific risk be diversified away by investing in both Loads and Gul Ahmed 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 Loads and Gul Ahmed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loads and Gul Ahmed Textile, you can compare the effects of market volatilities on Loads and Gul Ahmed 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 Loads with a short position of Gul Ahmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loads and Gul Ahmed.
Diversification Opportunities for Loads and Gul Ahmed
Very poor diversification
The 3 months correlation between Loads and Gul is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Loads and Gul Ahmed Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gul Ahmed Textile and Loads 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 Loads are associated (or correlated) with Gul Ahmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gul Ahmed Textile has no effect on the direction of Loads i.e., Loads and Gul Ahmed go up and down completely randomly.
Pair Corralation between Loads and Gul Ahmed
Assuming the 90 days trading horizon Loads is expected to under-perform the Gul Ahmed. In addition to that, Loads is 1.12 times more volatile than Gul Ahmed Textile. It trades about -0.02 of its total potential returns per unit of risk. Gul Ahmed Textile is currently generating about 0.04 per unit of volatility. If you would invest 2,608 in Gul Ahmed Textile on October 9, 2024 and sell it today you would earn a total of 36.00 from holding Gul Ahmed Textile or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loads vs. Gul Ahmed Textile
Performance |
| Timeline |
| Loads |
| Gul Ahmed Textile |
Loads and Gul Ahmed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loads and Gul Ahmed
The main advantage of trading using opposite Loads and Gul Ahmed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loads position performs unexpectedly, Gul Ahmed 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 Gul Ahmed will offset losses from the drop in Gul Ahmed's long position.| Loads vs. Pakistan Synthetics | Loads vs. Lotte Chemical Pakistan | Loads vs. Allied Bank | Loads vs. Jubilee Life Insurance |
| Gul Ahmed vs. Reliance Insurance Co | Gul Ahmed vs. Century Insurance | Gul Ahmed vs. JS Global Banking | Gul Ahmed vs. Silkbank |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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