Correlation Between Lucky Cement and Thatta Cement
Can any of the company-specific risk be diversified away by investing in both Lucky Cement and Thatta 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 Thatta 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 Thatta Cement, you can compare the effects of market volatilities on Lucky Cement and Thatta 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 Thatta Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucky Cement and Thatta Cement.
Diversification Opportunities for Lucky Cement and Thatta Cement
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lucky and Thatta is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lucky Cement and Thatta Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thatta 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 Thatta Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thatta Cement has no effect on the direction of Lucky Cement i.e., Lucky Cement and Thatta Cement go up and down completely randomly.
Pair Corralation between Lucky Cement and Thatta Cement
Assuming the 90 days trading horizon Lucky Cement is expected to generate 1.95 times less return on investment than Thatta Cement. But when comparing it to its historical volatility, Lucky Cement is 1.28 times less risky than Thatta Cement. It trades about 0.05 of its potential returns per unit of risk. Thatta Cement is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 20,340 in Thatta Cement on October 21, 2024 and sell it today you would earn a total of 798.00 from holding Thatta Cement or generate 3.92% 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. Thatta Cement
Performance |
| Timeline |
| Lucky Cement |
| Thatta Cement |
Lucky Cement and Thatta Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucky Cement and Thatta Cement
The main advantage of trading using opposite Lucky Cement and Thatta Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucky Cement position performs unexpectedly, Thatta 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 Thatta Cement will offset losses from the drop in Thatta Cement's long position.| Lucky Cement vs. Oil and Gas | Lucky Cement vs. Pakistan State Oil | Lucky Cement vs. Pakistan Petroleum | Lucky Cement vs. Mari Petroleum |
| Thatta Cement vs. Oil and Gas | Thatta Cement vs. Pakistan State Oil | Thatta Cement vs. Pakistan Petroleum | Thatta Cement vs. Lucky Cement |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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