Correlation Between National Refinery and Security Investment
Can any of the company-specific risk be diversified away by investing in both National Refinery and Security Investment 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 National Refinery and Security Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Refinery and Security Investment Bank, you can compare the effects of market volatilities on National Refinery and Security Investment 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 National Refinery with a short position of Security Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Refinery and Security Investment.
Diversification Opportunities for National Refinery and Security Investment
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Security is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding National Refinery and Security Investment Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Investment Bank and National Refinery 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 National Refinery are associated (or correlated) with Security Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Investment Bank has no effect on the direction of National Refinery i.e., National Refinery and Security Investment go up and down completely randomly.
Pair Corralation between National Refinery and Security Investment
Assuming the 90 days trading horizon National Refinery is expected to under-perform the Security Investment. But the stock apears to be less risky and, when comparing its historical volatility, National Refinery is 2.07 times less risky than Security Investment. The stock trades about -0.04 of its potential returns per unit of risk. The Security Investment Bank is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 455.00 in Security Investment Bank on September 3, 2024 and sell it today you would earn a total of 51.00 from holding Security Investment Bank or generate 11.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 76.67% |
| Values | Daily Returns |
National Refinery vs. Security Investment Bank
Performance |
| Timeline |
| National Refinery |
| Security Investment Bank |
National Refinery and Security Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Refinery and Security Investment
The main advantage of trading using opposite National Refinery and Security Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Refinery position performs unexpectedly, Security Investment 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 Security Investment will offset losses from the drop in Security Investment's long position.| National Refinery vs. Big Bird Foods | National Refinery vs. Ittehad Chemicals | National Refinery vs. IBL HealthCare | National Refinery vs. Amreli Steels |
| Security Investment vs. Masood Textile Mills | Security Investment vs. Fauji Foods | Security Investment vs. KSB Pumps | Security Investment 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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