Correlation Between Pak Datacom and Agha Steel
Can any of the company-specific risk be diversified away by investing in both Pak Datacom 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 Pak Datacom and Agha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pak Datacom and Agha Steel Industries, you can compare the effects of market volatilities on Pak Datacom 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 Pak Datacom with a short position of Agha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pak Datacom and Agha Steel.
Diversification Opportunities for Pak Datacom and Agha Steel
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pak and Agha is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pak Datacom 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 Pak Datacom 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 Pak Datacom 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 Pak Datacom i.e., Pak Datacom and Agha Steel go up and down completely randomly.
Pair Corralation between Pak Datacom and Agha Steel
Assuming the 90 days trading horizon Pak Datacom is expected to under-perform the Agha Steel. In addition to that, Pak Datacom is 2.0 times more volatile than Agha Steel Industries. It trades about -0.49 of its total potential returns per unit of risk. Agha Steel Industries is currently generating about -0.2 per unit of volatility. If you would invest 1,063 in Agha Steel Industries on November 8, 2024 and sell it today you would lose (73.00) from holding Agha Steel Industries or give up 6.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pak Datacom vs. Agha Steel Industries
Performance |
| Timeline |
| Pak Datacom |
| Agha Steel Industries |
Pak Datacom and Agha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pak Datacom and Agha Steel
The main advantage of trading using opposite Pak Datacom and Agha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pak Datacom 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.| Pak Datacom vs. Masood Textile Mills | Pak Datacom vs. Fauji Foods | Pak Datacom vs. KSB Pumps | Pak Datacom vs. Mari Petroleum |
| Agha Steel vs. Habib Insurance | Agha Steel vs. Ghandhara Automobile | Agha Steel vs. Shadab Textile Mills | Agha Steel vs. Century Insurance |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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