Correlation Between Orient Rental and Allied Bank
Can any of the company-specific risk be diversified away by investing in both Orient Rental and Allied Bank 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 Orient Rental and Allied Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orient Rental Modaraba and Allied Bank, you can compare the effects of market volatilities on Orient Rental and Allied Bank 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 Orient Rental with a short position of Allied Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Rental and Allied Bank.
Diversification Opportunities for Orient Rental and Allied Bank
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Orient and Allied is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Orient Rental Modaraba and Allied Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Bank and Orient Rental 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 Orient Rental Modaraba are associated (or correlated) with Allied Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Bank has no effect on the direction of Orient Rental i.e., Orient Rental and Allied Bank go up and down completely randomly.
Pair Corralation between Orient Rental and Allied Bank
Assuming the 90 days trading horizon Orient Rental is expected to generate 1.3 times less return on investment than Allied Bank. In addition to that, Orient Rental is 1.39 times more volatile than Allied Bank. It trades about 0.12 of its total potential returns per unit of risk. Allied Bank is currently generating about 0.21 per unit of volatility. If you would invest 9,148 in Allied Bank on September 2, 2024 and sell it today you would earn a total of 5,227 from holding Allied Bank or generate 57.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 78.86% |
| Values | Daily Returns |
Orient Rental Modaraba vs. Allied Bank
Performance |
| Timeline |
| Orient Rental Modaraba |
| Allied Bank |
Orient Rental and Allied Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orient Rental and Allied Bank
The main advantage of trading using opposite Orient Rental and Allied Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Rental position performs unexpectedly, Allied Bank 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 Allied Bank will offset losses from the drop in Allied Bank's long position.| Orient Rental vs. Masood Textile Mills | Orient Rental vs. Fauji Foods | Orient Rental vs. KSB Pumps | Orient Rental vs. Mari Petroleum |
| Allied Bank vs. Wah Nobel Chemicals | Allied Bank vs. AKD Hospitality | Allied Bank vs. Adamjee Insurance | Allied Bank vs. Hi Tech Lubricants |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |