Correlation Between National Bank and Agha Steel
Can any of the company-specific risk be diversified away by investing in both National Bank and Agha Steel 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 Bank and Agha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank of and Agha Steel Industries, you can compare the effects of market volatilities on National Bank and Agha Steel 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 Bank with a short position of Agha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Agha Steel.
Diversification Opportunities for National Bank and Agha Steel
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Agha is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Agha Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agha Steel Industries and National Bank 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 Bank of are associated (or correlated) with Agha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agha Steel Industries has no effect on the direction of National Bank i.e., National Bank and Agha Steel go up and down completely randomly.
Pair Corralation between National Bank and Agha Steel
Assuming the 90 days trading horizon National Bank of is expected to generate 2.39 times more return on investment than Agha Steel. However, National Bank is 2.39 times more volatile than Agha Steel Industries. It trades about 0.25 of its potential returns per unit of risk. Agha Steel Industries is currently generating about -0.14 per unit of risk. If you would invest 6,329 in National Bank of on November 28, 2024 and sell it today you would earn a total of 1,072 from holding National Bank of or generate 16.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. Agha Steel Industries
Performance |
| Timeline |
| National Bank |
| Agha Steel Industries |
National Bank and Agha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Agha Steel
The main advantage of trading using opposite National Bank and Agha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Agha Steel 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 Agha Steel will offset losses from the drop in Agha Steel's long position.| National Bank vs. MCB Bank | National Bank vs. Faysal Bank | National Bank vs. Pakistan Aluminium Beverage | National Bank vs. JS Bank |
| Agha Steel vs. Dost Steels | Agha Steel vs. Pakistan Telecommunication | Agha Steel vs. Unilever Pakistan Foods | Agha Steel vs. Wah Nobel Chemicals |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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