Correlation Between Orient Rental and Agha Steel
Can any of the company-specific risk be diversified away by investing in both Orient Rental and Agha 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 Orient Rental and Agha Steel 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 Agha Steel Industries, you can compare the effects of market volatilities on Orient Rental and Agha 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 Orient Rental with a short position of Agha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Rental and Agha Steel.
Diversification Opportunities for Orient Rental and Agha Steel
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Orient and Agha is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Orient Rental Modaraba and Agha Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agha Steel Industries 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 Agha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agha Steel Industries has no effect on the direction of Orient Rental i.e., Orient Rental and Agha Steel go up and down completely randomly.
Pair Corralation between Orient Rental and Agha Steel
Assuming the 90 days trading horizon Orient Rental Modaraba is expected to generate 1.11 times more return on investment than Agha Steel. However, Orient Rental is 1.11 times more volatile than Agha Steel Industries. It trades about 0.06 of its potential returns per unit of risk. Agha Steel Industries is currently generating about -0.02 per unit of risk. If you would invest 553.00 in Orient Rental Modaraba on October 25, 2024 and sell it today you would earn a total of 249.00 from holding Orient Rental Modaraba or generate 45.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 76.82% |
| Values | Daily Returns |
Orient Rental Modaraba vs. Agha Steel Industries
Performance |
| Timeline |
| Orient Rental Modaraba |
| Agha Steel Industries |
Orient Rental and Agha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orient Rental and Agha Steel
The main advantage of trading using opposite Orient Rental and Agha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Rental position performs unexpectedly, Agha 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 Agha Steel will offset losses from the drop in Agha Steel's long position.| Orient Rental vs. Unity Foods | Orient Rental vs. Unilever Pakistan Foods | Orient Rental vs. Metropolitan Steel Corp | Orient Rental vs. Dost Steels |
| Agha Steel vs. Sindh Modaraba Management | Agha Steel vs. Ghandhara Automobile | Agha Steel vs. Wah Nobel Chemicals | Agha Steel vs. Grays Leasing |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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