Correlation Between Nimir Industrial and Fauji Cement
Can any of the company-specific risk be diversified away by investing in both Nimir Industrial and Fauji Cement 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 Fauji Cement 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 Fauji Cement, you can compare the effects of market volatilities on Nimir Industrial and Fauji Cement 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 Fauji Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nimir Industrial and Fauji Cement.
Diversification Opportunities for Nimir Industrial and Fauji Cement
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nimir and Fauji is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nimir Industrial Chemical and Fauji Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fauji Cement 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 Fauji Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fauji Cement has no effect on the direction of Nimir Industrial i.e., Nimir Industrial and Fauji Cement go up and down completely randomly.
Pair Corralation between Nimir Industrial and Fauji Cement
Assuming the 90 days trading horizon Nimir Industrial Chemical is expected to under-perform the Fauji Cement. But the stock apears to be less risky and, when comparing its historical volatility, Nimir Industrial Chemical is 1.13 times less risky than Fauji Cement. The stock trades about -0.05 of its potential returns per unit of risk. The Fauji Cement is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,707 in Fauji Cement on November 3, 2024 and sell it today you would earn a total of 103.00 from holding Fauji Cement or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nimir Industrial Chemical vs. Fauji Cement
Performance |
| Timeline |
| Nimir Industrial Chemical |
| Fauji Cement |
Nimir Industrial and Fauji Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nimir Industrial and Fauji Cement
The main advantage of trading using opposite Nimir Industrial and Fauji Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nimir Industrial position performs unexpectedly, Fauji Cement 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 Fauji Cement will offset losses from the drop in Fauji Cement's long position.| Nimir Industrial vs. Sindh Modaraba Management | Nimir Industrial vs. 786 Investment Limited | Nimir Industrial vs. Invest Capital Investment | Nimir Industrial vs. IBL HealthCare |
| Fauji Cement vs. Pak Datacom | Fauji Cement vs. Ittehad Chemicals | Fauji Cement vs. Sardar Chemical Industries | Fauji Cement vs. Unity 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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