Correlation Between Pakistan Tobacco and Agha Steel
Can any of the company-specific risk be diversified away by investing in both Pakistan Tobacco 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 Pakistan Tobacco and Agha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Tobacco and Agha Steel Industries, you can compare the effects of market volatilities on Pakistan Tobacco 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 Pakistan Tobacco with a short position of Agha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Tobacco and Agha Steel.
Diversification Opportunities for Pakistan Tobacco and Agha Steel
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pakistan and Agha is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Tobacco 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 Pakistan Tobacco 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 Tobacco 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 Pakistan Tobacco i.e., Pakistan Tobacco and Agha Steel go up and down completely randomly.
Pair Corralation between Pakistan Tobacco and Agha Steel
Assuming the 90 days trading horizon Pakistan Tobacco is expected to generate 0.61 times more return on investment than Agha Steel. However, Pakistan Tobacco is 1.65 times less risky than Agha Steel. It trades about 0.0 of its potential returns per unit of risk. Agha Steel Industries is currently generating about -0.1 per unit of risk. If you would invest 124,682 in Pakistan Tobacco on October 26, 2024 and sell it today you would lose (679.00) from holding Pakistan Tobacco or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Tobacco vs. Agha Steel Industries
Performance |
| Timeline |
| Pakistan Tobacco |
| Agha Steel Industries |
Pakistan Tobacco and Agha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Tobacco and Agha Steel
The main advantage of trading using opposite Pakistan Tobacco and Agha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Tobacco 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.| Pakistan Tobacco vs. Matco Foods | Pakistan Tobacco vs. Wah Nobel Chemicals | Pakistan Tobacco vs. Engro Polymer Chemicals | Pakistan Tobacco vs. Ghani Chemical Industries |
| Agha Steel vs. Engro Polymer Chemicals | Agha Steel vs. United Insurance | Agha Steel vs. National Foods | Agha Steel vs. Unity Foods |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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