Correlation Between Nimir Industrial and JS Investments
Can any of the company-specific risk be diversified away by investing in both Nimir Industrial and JS Investments 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 JS Investments 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 JS Investments, you can compare the effects of market volatilities on Nimir Industrial and JS Investments 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 JS Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nimir Industrial and JS Investments.
Diversification Opportunities for Nimir Industrial and JS Investments
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nimir and JSIL is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nimir Industrial Chemical and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments 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 JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of Nimir Industrial i.e., Nimir Industrial and JS Investments go up and down completely randomly.
Pair Corralation between Nimir Industrial and JS Investments
Assuming the 90 days trading horizon Nimir Industrial is expected to generate 1.43 times less return on investment than JS Investments. But when comparing it to its historical volatility, Nimir Industrial Chemical is 1.54 times less risky than JS Investments. It trades about 0.07 of its potential returns per unit of risk. JS Investments is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,585 in JS Investments on November 5, 2024 and sell it today you would earn a total of 615.00 from holding JS Investments or generate 38.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.47% |
| Values | Daily Returns |
Nimir Industrial Chemical vs. JS Investments
Performance |
| Timeline |
| Nimir Industrial Chemical |
| JS Investments |
Nimir Industrial and JS Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nimir Industrial and JS Investments
The main advantage of trading using opposite Nimir Industrial and JS Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nimir Industrial position performs unexpectedly, JS Investments 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 JS Investments will offset losses from the drop in JS Investments' long position.| Nimir Industrial vs. Wah Nobel Chemicals | Nimir Industrial vs. Hi Tech Lubricants | Nimir Industrial vs. Matco Foods | Nimir Industrial vs. Pakistan Telecommunication |
| JS Investments vs. Shaheen Insurance | JS Investments vs. Air Link Communication | JS Investments vs. Crescent Steel Allied | JS Investments vs. Beco Steel |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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