Correlation Between Pakistan Aluminium and Adamjee Insurance
Can any of the company-specific risk be diversified away by investing in both Pakistan Aluminium and Adamjee Insurance 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 Pakistan Aluminium and Adamjee Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Aluminium Beverage and Adamjee Insurance, you can compare the effects of market volatilities on Pakistan Aluminium and Adamjee Insurance 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 Pakistan Aluminium with a short position of Adamjee Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Aluminium and Adamjee Insurance.
Diversification Opportunities for Pakistan Aluminium and Adamjee Insurance
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pakistan and Adamjee is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Aluminium Beverage and Adamjee Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamjee Insurance and Pakistan Aluminium 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 Pakistan Aluminium Beverage are associated (or correlated) with Adamjee Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adamjee Insurance has no effect on the direction of Pakistan Aluminium i.e., Pakistan Aluminium and Adamjee Insurance go up and down completely randomly.
Pair Corralation between Pakistan Aluminium and Adamjee Insurance
Assuming the 90 days trading horizon Pakistan Aluminium Beverage is expected to under-perform the Adamjee Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Pakistan Aluminium Beverage is 1.15 times less risky than Adamjee Insurance. The stock trades about -0.17 of its potential returns per unit of risk. The Adamjee Insurance is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 5,123 in Adamjee Insurance on November 9, 2024 and sell it today you would lose (193.00) from holding Adamjee Insurance or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Aluminium Beverage vs. Adamjee Insurance
Performance |
| Timeline |
| Pakistan Aluminium |
| Adamjee Insurance |
Pakistan Aluminium and Adamjee Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Aluminium and Adamjee Insurance
The main advantage of trading using opposite Pakistan Aluminium and Adamjee Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Aluminium position performs unexpectedly, Adamjee Insurance 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 Adamjee Insurance will offset losses from the drop in Adamjee Insurance's long position.| Pakistan Aluminium vs. IGI Life Insurance | Pakistan Aluminium vs. Adamjee Insurance | Pakistan Aluminium vs. Sitara Chemical Industries | Pakistan Aluminium vs. ORIX Leasing Pakistan |
| Adamjee Insurance vs. EFU General Insurance | Adamjee Insurance vs. Shaheen Insurance | Adamjee Insurance vs. Apna Microfinance Bank | Adamjee Insurance vs. Bank of Punjab |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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