Correlation Between Nimir Industrial and Pakistan Hotel
Can any of the company-specific risk be diversified away by investing in both Nimir Industrial and Pakistan Hotel 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 Pakistan Hotel 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 Pakistan Hotel Developers, you can compare the effects of market volatilities on Nimir Industrial and Pakistan Hotel 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 Pakistan Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nimir Industrial and Pakistan Hotel.
Diversification Opportunities for Nimir Industrial and Pakistan Hotel
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nimir and Pakistan is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nimir Industrial Chemical and Pakistan Hotel Developers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Hotel Developers 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 Pakistan Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Hotel Developers has no effect on the direction of Nimir Industrial i.e., Nimir Industrial and Pakistan Hotel go up and down completely randomly.
Pair Corralation between Nimir Industrial and Pakistan Hotel
Assuming the 90 days trading horizon Nimir Industrial is expected to generate 13.9 times less return on investment than Pakistan Hotel. But when comparing it to its historical volatility, Nimir Industrial Chemical is 2.75 times less risky than Pakistan Hotel. It trades about 0.12 of its potential returns per unit of risk. Pakistan Hotel Developers is currently generating about 0.63 of returns per unit of risk over similar time horizon. If you would invest 3,497 in Pakistan Hotel Developers on September 12, 2024 and sell it today you would earn a total of 2,824 from holding Pakistan Hotel Developers or generate 80.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nimir Industrial Chemical vs. Pakistan Hotel Developers
Performance |
| Timeline |
| Nimir Industrial Chemical |
| Pakistan Hotel Developers |
Nimir Industrial and Pakistan Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nimir Industrial and Pakistan Hotel
The main advantage of trading using opposite Nimir Industrial and Pakistan Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nimir Industrial position performs unexpectedly, Pakistan Hotel 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 Pakistan Hotel will offset losses from the drop in Pakistan Hotel's long position.| Nimir Industrial vs. Roshan Packages | Nimir Industrial vs. Packages | Nimir Industrial vs. Ghandhara Automobile | Nimir Industrial vs. Askari Bank |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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