Correlation Between Mughal Iron and ZAHIDJEE Textile
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By analyzing existing cross correlation between Mughal Iron Steel and ZAHIDJEE Textile Mills, you can compare the effects of market volatilities on Mughal Iron and ZAHIDJEE Textile 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 Mughal Iron with a short position of ZAHIDJEE Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mughal Iron and ZAHIDJEE Textile.
Diversification Opportunities for Mughal Iron and ZAHIDJEE Textile
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mughal and ZAHIDJEE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mughal Iron Steel and ZAHIDJEE Textile Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZAHIDJEE Textile Mills and Mughal Iron 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 Mughal Iron Steel are associated (or correlated) with ZAHIDJEE Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZAHIDJEE Textile Mills has no effect on the direction of Mughal Iron i.e., Mughal Iron and ZAHIDJEE Textile go up and down completely randomly.
Pair Corralation between Mughal Iron and ZAHIDJEE Textile
Assuming the 90 days trading horizon Mughal Iron is expected to generate 2.03 times less return on investment than ZAHIDJEE Textile. But when comparing it to its historical volatility, Mughal Iron Steel is 1.27 times less risky than ZAHIDJEE Textile. It trades about 0.14 of its potential returns per unit of risk. ZAHIDJEE Textile Mills is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,601 in ZAHIDJEE Textile Mills on September 12, 2024 and sell it today you would earn a total of 390.00 from holding ZAHIDJEE Textile Mills or generate 14.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 65.22% |
| Values | Daily Returns |
Mughal Iron Steel vs. ZAHIDJEE Textile Mills
Performance |
| Timeline |
| Mughal Iron Steel |
| ZAHIDJEE Textile Mills |
Mughal Iron and ZAHIDJEE Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mughal Iron and ZAHIDJEE Textile
The main advantage of trading using opposite Mughal Iron and ZAHIDJEE Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mughal Iron position performs unexpectedly, ZAHIDJEE Textile 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 ZAHIDJEE Textile will offset losses from the drop in ZAHIDJEE Textile's long position.| Mughal Iron vs. Nimir Industrial Chemical | Mughal Iron vs. EFU General Insurance | Mughal Iron vs. Beco Steel | Mughal Iron vs. Century Insurance |
| ZAHIDJEE Textile vs. Mughal Iron Steel | ZAHIDJEE Textile vs. Pakistan Aluminium Beverage | ZAHIDJEE Textile vs. Security Investment Bank | ZAHIDJEE Textile vs. Beco Steel |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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