Correlation Between National Foods and Khalid Siraj
Can any of the company-specific risk be diversified away by investing in both National Foods and Khalid Siraj 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 Khalid Siraj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Foods and Khalid Siraj Textile, you can compare the effects of market volatilities on National Foods and Khalid Siraj 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 Khalid Siraj. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Foods and Khalid Siraj.
Diversification Opportunities for National Foods and Khalid Siraj
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and Khalid is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding National Foods and Khalid Siraj Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khalid Siraj Textile 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 Khalid Siraj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khalid Siraj Textile has no effect on the direction of National Foods i.e., National Foods and Khalid Siraj go up and down completely randomly.
Pair Corralation between National Foods and Khalid Siraj
Assuming the 90 days trading horizon National Foods is expected to generate 0.34 times more return on investment than Khalid Siraj. However, National Foods is 2.96 times less risky than Khalid Siraj. It trades about 0.27 of its potential returns per unit of risk. Khalid Siraj Textile is currently generating about -0.05 per unit of risk. If you would invest 16,949 in National Foods on September 12, 2024 and sell it today you would earn a total of 1,990 from holding National Foods or generate 11.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Foods vs. Khalid Siraj Textile
Performance |
| Timeline |
| National Foods |
| Khalid Siraj Textile |
National Foods and Khalid Siraj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Foods and Khalid Siraj
The main advantage of trading using opposite National Foods and Khalid Siraj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Foods position performs unexpectedly, Khalid Siraj 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 Khalid Siraj will offset losses from the drop in Khalid Siraj's long position.| National Foods vs. Masood Textile Mills | National Foods vs. Fauji Foods | National Foods vs. KSB Pumps | National Foods vs. Mari Petroleum |
| Khalid Siraj vs. Quice Food Industries | Khalid Siraj vs. International Steels | Khalid Siraj vs. Unity Foods | Khalid Siraj vs. National Foods |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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