Correlation Between Nimir Industrial and Askari Bank
Can any of the company-specific risk be diversified away by investing in both Nimir Industrial and Askari 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 Nimir Industrial and Askari Bank 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 Bank, you can compare the effects of market volatilities on Nimir Industrial and Askari 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 Nimir Industrial with a short position of Askari Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nimir Industrial and Askari Bank.
Diversification Opportunities for Nimir Industrial and Askari Bank
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nimir and Askari is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Nimir Industrial Chemical and Askari Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Askari Bank 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 Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Askari Bank has no effect on the direction of Nimir Industrial i.e., Nimir Industrial and Askari Bank go up and down completely randomly.
Pair Corralation between Nimir Industrial and Askari Bank
Assuming the 90 days trading horizon Nimir Industrial is expected to generate 2.56 times less return on investment than Askari Bank. But when comparing it to its historical volatility, Nimir Industrial Chemical is 1.13 times less risky than Askari Bank. It trades about 0.07 of its potential returns per unit of risk. Askari Bank is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,285 in Askari Bank on September 3, 2024 and sell it today you would earn a total of 1,697 from holding Askari Bank or generate 74.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.5% |
| Values | Daily Returns |
Nimir Industrial Chemical vs. Askari Bank
Performance |
| Timeline |
| Nimir Industrial Chemical |
| Askari Bank |
Nimir Industrial and Askari Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nimir Industrial and Askari Bank
The main advantage of trading using opposite Nimir Industrial and Askari Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nimir Industrial position performs unexpectedly, Askari 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 Askari Bank will offset losses from the drop in Askari Bank's long position.| Nimir Industrial vs. Masood Textile Mills | Nimir Industrial vs. Fauji Foods | Nimir Industrial vs. KSB Pumps | Nimir Industrial vs. Mari Petroleum |
| Askari Bank vs. Pakistan Hotel Developers | Askari Bank vs. Nimir Industrial Chemical | Askari Bank vs. Oil and Gas | Askari Bank vs. Crescent Steel Allied |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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