Correlation Between National Foods and Faysal Bank
Can any of the company-specific risk be diversified away by investing in both National Foods and Faysal Bank 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 National Foods and Faysal Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Foods and Faysal Bank, you can compare the effects of market volatilities on National Foods and Faysal Bank 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 National Foods with a short position of Faysal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Foods and Faysal Bank.
Diversification Opportunities for National Foods and Faysal Bank
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Faysal is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding National Foods and Faysal Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faysal Bank and National Foods 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 National Foods are associated (or correlated) with Faysal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faysal Bank has no effect on the direction of National Foods i.e., National Foods and Faysal Bank go up and down completely randomly.
Pair Corralation between National Foods and Faysal Bank
Assuming the 90 days trading horizon National Foods is expected to generate 2.28 times less return on investment than Faysal Bank. But when comparing it to its historical volatility, National Foods is 1.21 times less risky than Faysal Bank. It trades about 0.05 of its potential returns per unit of risk. Faysal Bank is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,818 in Faysal Bank on September 2, 2024 and sell it today you would earn a total of 1,935 from holding Faysal Bank or generate 68.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Foods vs. Faysal Bank
Performance |
| Timeline |
| National Foods |
| Faysal Bank |
National Foods and Faysal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Foods and Faysal Bank
The main advantage of trading using opposite National Foods and Faysal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Foods position performs unexpectedly, Faysal Bank 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 Faysal Bank will offset losses from the drop in Faysal Bank's long position.| National Foods vs. Masood Textile Mills | National Foods vs. Fauji Foods | National Foods vs. KSB Pumps | National Foods vs. Mari Petroleum |
| Faysal Bank vs. Masood Textile Mills | Faysal Bank vs. Fauji Foods | Faysal Bank vs. KSB Pumps | Faysal Bank vs. Mari Petroleum |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |