Correlation Between Oil and Aisha Steel
Can any of the company-specific risk be diversified away by investing in both Oil and Aisha Steel 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 Oil and Aisha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil and Gas and Aisha Steel Mills, you can compare the effects of market volatilities on Oil and Aisha Steel 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 Oil with a short position of Aisha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil and Aisha Steel.
Diversification Opportunities for Oil and Aisha Steel
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Oil and Aisha is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Oil and Gas and Aisha Steel Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aisha Steel Mills and Oil 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 Oil and Gas are associated (or correlated) with Aisha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aisha Steel Mills has no effect on the direction of Oil i.e., Oil and Aisha Steel go up and down completely randomly.
Pair Corralation between Oil and Aisha Steel
Assuming the 90 days trading horizon Oil is expected to generate 1.49 times less return on investment than Aisha Steel. But when comparing it to its historical volatility, Oil and Gas is 2.05 times less risky than Aisha Steel. It trades about 0.28 of its potential returns per unit of risk. Aisha Steel Mills is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 671.00 in Aisha Steel Mills on August 28, 2024 and sell it today you would earn a total of 119.00 from holding Aisha Steel Mills or generate 17.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil and Gas vs. Aisha Steel Mills
Performance |
| Timeline |
| Oil and Gas |
| Aisha Steel Mills |
Oil and Aisha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil and Aisha Steel
The main advantage of trading using opposite Oil and Aisha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil position performs unexpectedly, Aisha Steel 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 Aisha Steel will offset losses from the drop in Aisha Steel's long position.The idea behind Oil and Gas and Aisha Steel Mills pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aisha Steel vs. Oil and Gas | Aisha Steel vs. Pakistan State Oil | Aisha Steel vs. Pakistan Petroleum | Aisha Steel vs. Engro |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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