Correlation Between National Bank and Bilal Fibres
Can any of the company-specific risk be diversified away by investing in both National Bank and Bilal Fibres 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 Bilal Fibres 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 Bilal Fibres, you can compare the effects of market volatilities on National Bank and Bilal Fibres 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 Bilal Fibres. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Bilal Fibres.
Diversification Opportunities for National Bank and Bilal Fibres
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and Bilal is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Bilal Fibres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilal Fibres 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 Bilal Fibres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilal Fibres has no effect on the direction of National Bank i.e., National Bank and Bilal Fibres go up and down completely randomly.
Pair Corralation between National Bank and Bilal Fibres
Assuming the 90 days trading horizon National Bank of is expected to generate 0.42 times more return on investment than Bilal Fibres. However, National Bank of is 2.37 times less risky than Bilal Fibres. It trades about 0.07 of its potential returns per unit of risk. Bilal Fibres is currently generating about 0.01 per unit of risk. If you would invest 6,932 in National Bank of on August 30, 2024 and sell it today you would earn a total of 300.00 from holding National Bank of or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. Bilal Fibres
Performance |
| Timeline |
| National Bank |
| Bilal Fibres |
National Bank and Bilal Fibres Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Bilal Fibres
The main advantage of trading using opposite National Bank and Bilal Fibres positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Bilal Fibres 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 Bilal Fibres will offset losses from the drop in Bilal Fibres' long position.| National Bank vs. Pakistan Synthetics | National Bank vs. Silkbank | National Bank vs. Big Bird Foods | National Bank vs. Ghani Chemical Industries |
| Bilal Fibres vs. Big Bird Foods | Bilal Fibres vs. Matco Foods | Bilal Fibres vs. Adamjee Insurance | Bilal Fibres vs. AKD Hospitality |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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