Correlation Between Nimir Industrial and Askari General
Can any of the company-specific risk be diversified away by investing in both Nimir Industrial and Askari General 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 Nimir Industrial and Askari General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nimir Industrial Chemical and Askari General Insurance, you can compare the effects of market volatilities on Nimir Industrial and Askari General 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 Nimir Industrial with a short position of Askari General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nimir Industrial and Askari General.
Diversification Opportunities for Nimir Industrial and Askari General
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nimir and Askari is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Nimir Industrial Chemical and Askari General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Askari General Insurance and Nimir Industrial 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 Nimir Industrial Chemical are associated (or correlated) with Askari General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Askari General Insurance has no effect on the direction of Nimir Industrial i.e., Nimir Industrial and Askari General go up and down completely randomly.
Pair Corralation between Nimir Industrial and Askari General
Assuming the 90 days trading horizon Nimir Industrial is expected to generate 1.58 times less return on investment than Askari General. But when comparing it to its historical volatility, Nimir Industrial Chemical is 1.04 times less risky than Askari General. It trades about 0.07 of its potential returns per unit of risk. Askari General Insurance is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,242 in Askari General Insurance on September 12, 2024 and sell it today you would earn a total of 1,436 from holding Askari General Insurance or generate 115.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 93.08% |
| Values | Daily Returns |
Nimir Industrial Chemical vs. Askari General Insurance
Performance |
| Timeline |
| Nimir Industrial Chemical |
| Askari General Insurance |
Nimir Industrial and Askari General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nimir Industrial and Askari General
The main advantage of trading using opposite Nimir Industrial and Askari General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nimir Industrial position performs unexpectedly, Askari General 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 Askari General will offset losses from the drop in Askari General's long position.| Nimir Industrial vs. Roshan Packages | Nimir Industrial vs. Packages | Nimir Industrial vs. Ghandhara Automobile | Nimir Industrial vs. Askari Bank |
| Askari General vs. Masood Textile Mills | Askari General vs. Fauji Foods | Askari General vs. KSB Pumps | Askari General 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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