Correlation Between Lucky Cement and Abbott Laboratories
Can any of the company-specific risk be diversified away by investing in both Lucky Cement and Abbott Laboratories 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 Lucky Cement and Abbott Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucky Cement and Abbott Laboratories Pakistan, you can compare the effects of market volatilities on Lucky Cement and Abbott Laboratories 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 Lucky Cement with a short position of Abbott Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucky Cement and Abbott Laboratories.
Diversification Opportunities for Lucky Cement and Abbott Laboratories
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lucky and Abbott is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lucky Cement and Abbott Laboratories Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbott Laboratories and Lucky Cement 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 Lucky Cement are associated (or correlated) with Abbott Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbott Laboratories has no effect on the direction of Lucky Cement i.e., Lucky Cement and Abbott Laboratories go up and down completely randomly.
Pair Corralation between Lucky Cement and Abbott Laboratories
Assuming the 90 days trading horizon Lucky Cement is expected to generate 1.32 times less return on investment than Abbott Laboratories. But when comparing it to its historical volatility, Lucky Cement is 1.75 times less risky than Abbott Laboratories. It trades about 0.21 of its potential returns per unit of risk. Abbott Laboratories Pakistan is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 89,758 in Abbott Laboratories Pakistan on August 28, 2024 and sell it today you would earn a total of 10,090 from holding Abbott Laboratories Pakistan or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucky Cement vs. Abbott Laboratories Pakistan
Performance |
| Timeline |
| Lucky Cement |
| Abbott Laboratories |
Lucky Cement and Abbott Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucky Cement and Abbott Laboratories
The main advantage of trading using opposite Lucky Cement and Abbott Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucky Cement position performs unexpectedly, Abbott Laboratories 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 Abbott Laboratories will offset losses from the drop in Abbott Laboratories' long position.| Lucky Cement vs. Habib Bank | Lucky Cement vs. National Bank of | Lucky Cement vs. United Bank | Lucky Cement vs. MCB Bank |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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