Correlation Between Lucky Cement and Fauji Cement
Can any of the company-specific risk be diversified away by investing in both Lucky Cement and Fauji Cement 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 Fauji Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucky Cement and Fauji Cement, you can compare the effects of market volatilities on Lucky Cement and Fauji Cement 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 Fauji Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucky Cement and Fauji Cement.
Diversification Opportunities for Lucky Cement and Fauji Cement
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lucky and Fauji is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lucky Cement and Fauji Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fauji Cement 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 Fauji Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fauji Cement has no effect on the direction of Lucky Cement i.e., Lucky Cement and Fauji Cement go up and down completely randomly.
Pair Corralation between Lucky Cement and Fauji Cement
Assuming the 90 days trading horizon Lucky Cement is expected to generate 1.04 times more return on investment than Fauji Cement. However, Lucky Cement is 1.04 times more volatile than Fauji Cement. It trades about 0.01 of its potential returns per unit of risk. Fauji Cement is currently generating about -0.02 per unit of risk. If you would invest 113,213 in Lucky Cement on October 23, 2024 and sell it today you would earn a total of 83.00 from holding Lucky Cement or generate 0.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Lucky Cement vs. Fauji Cement
Performance |
| Timeline |
| Lucky Cement |
| Fauji Cement |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Lucky Cement and Fauji Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucky Cement and Fauji Cement
The main advantage of trading using opposite Lucky Cement and Fauji Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucky Cement position performs unexpectedly, Fauji Cement 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 Fauji Cement will offset losses from the drop in Fauji Cement's long position.| Lucky Cement vs. Invest Capital Investment | Lucky Cement vs. Jubilee Life Insurance | Lucky Cement vs. Hi Tech Lubricants | Lucky Cement vs. Pakistan Tobacco |
| Fauji Cement vs. Ghandhara Automobile | Fauji Cement vs. Fauji Foods | Fauji Cement vs. Century Insurance | Fauji Cement vs. EFU General Insurance |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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