Correlation Between Orient Rental and International Steels
Can any of the company-specific risk be diversified away by investing in both Orient Rental and International Steels 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 International Steels 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 International Steels, you can compare the effects of market volatilities on Orient Rental and International Steels 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 International Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Rental and International Steels.
Diversification Opportunities for Orient Rental and International Steels
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Orient and International is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Orient Rental Modaraba and International Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Steels 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 International Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Steels has no effect on the direction of Orient Rental i.e., Orient Rental and International Steels go up and down completely randomly.
Pair Corralation between Orient Rental and International Steels
Assuming the 90 days trading horizon Orient Rental Modaraba is expected to generate 2.3 times more return on investment than International Steels. However, Orient Rental is 2.3 times more volatile than International Steels. It trades about 0.08 of its potential returns per unit of risk. International Steels is currently generating about -0.29 per unit of risk. If you would invest 808.00 in Orient Rental Modaraba on November 22, 2024 and sell it today you would earn a total of 40.00 from holding Orient Rental Modaraba or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Orient Rental Modaraba vs. International Steels
Performance |
| Timeline |
| Orient Rental Modaraba |
| International Steels |
Orient Rental and International Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orient Rental and International Steels
The main advantage of trading using opposite Orient Rental and International Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Rental position performs unexpectedly, International Steels 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 International Steels will offset losses from the drop in International Steels' long position.| Orient Rental vs. Metropolitan Steel Corp | Orient Rental vs. Standard Chartered Bank | Orient Rental vs. Crescent Steel Allied | Orient Rental vs. Habib Insurance |
| International Steels vs. Murree Brewery | International Steels vs. Ghani Chemical Industries | International Steels vs. Pakistan Synthetics | International Steels vs. MCB Investment Manag |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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