Correlation Between Pakistan Reinsurance and Aisha Steel
Can any of the company-specific risk be diversified away by investing in both Pakistan Reinsurance and Aisha 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 Pakistan Reinsurance and Aisha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Reinsurance and Aisha Steel Mills, you can compare the effects of market volatilities on Pakistan Reinsurance and Aisha 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 Pakistan Reinsurance with a short position of Aisha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Reinsurance and Aisha Steel.
Diversification Opportunities for Pakistan Reinsurance and Aisha Steel
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pakistan and Aisha is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Reinsurance and Aisha Steel Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aisha Steel Mills and Pakistan Reinsurance 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 Reinsurance are associated (or correlated) with Aisha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aisha Steel Mills has no effect on the direction of Pakistan Reinsurance i.e., Pakistan Reinsurance and Aisha Steel go up and down completely randomly.
Pair Corralation between Pakistan Reinsurance and Aisha Steel
Assuming the 90 days trading horizon Pakistan Reinsurance is expected to generate 0.46 times more return on investment than Aisha Steel. However, Pakistan Reinsurance is 2.17 times less risky than Aisha Steel. It trades about 0.04 of its potential returns per unit of risk. Aisha Steel Mills is currently generating about -0.02 per unit of risk. If you would invest 1,483 in Pakistan Reinsurance on October 26, 2024 and sell it today you would earn a total of 16.00 from holding Pakistan Reinsurance or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Reinsurance vs. Aisha Steel Mills
Performance |
| Timeline |
| Pakistan Reinsurance |
| Aisha Steel Mills |
Pakistan Reinsurance and Aisha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Reinsurance and Aisha Steel
The main advantage of trading using opposite Pakistan Reinsurance and Aisha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Reinsurance position performs unexpectedly, Aisha 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 Aisha Steel will offset losses from the drop in Aisha Steel's long position.| Pakistan Reinsurance vs. Wah Nobel Chemicals | Pakistan Reinsurance vs. Atlas Insurance | Pakistan Reinsurance vs. Adamjee Insurance | Pakistan Reinsurance vs. Reliance Insurance Co |
| Aisha Steel vs. Pakistan Hotel Developers | Aisha Steel vs. Ghani Chemical Industries | Aisha Steel vs. Reliance Insurance Co | Aisha Steel vs. Soneri Bank |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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