Correlation Between Pak Gulf and Al Ghazi
Can any of the company-specific risk be diversified away by investing in both Pak Gulf and Al Ghazi 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 Gulf and Al Ghazi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pak Gulf Leasing and Al Ghazi Tractors, you can compare the effects of market volatilities on Pak Gulf and Al Ghazi 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 Gulf with a short position of Al Ghazi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pak Gulf and Al Ghazi.
Diversification Opportunities for Pak Gulf and Al Ghazi
Modest diversification
The 3 months correlation between Pak and AGTL is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pak Gulf Leasing and Al Ghazi Tractors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Ghazi Tractors and Pak Gulf 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 Gulf Leasing are associated (or correlated) with Al Ghazi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Ghazi Tractors has no effect on the direction of Pak Gulf i.e., Pak Gulf and Al Ghazi go up and down completely randomly.
Pair Corralation between Pak Gulf and Al Ghazi
Assuming the 90 days trading horizon Pak Gulf Leasing is expected to generate 2.08 times more return on investment than Al Ghazi. However, Pak Gulf is 2.08 times more volatile than Al Ghazi Tractors. It trades about 0.15 of its potential returns per unit of risk. Al Ghazi Tractors is currently generating about 0.23 per unit of risk. If you would invest 754.00 in Pak Gulf Leasing on September 12, 2024 and sell it today you would earn a total of 353.00 from holding Pak Gulf Leasing or generate 46.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.83% |
| Values | Daily Returns |
Pak Gulf Leasing vs. Al Ghazi Tractors
Performance |
| Timeline |
| Pak Gulf Leasing |
| Al Ghazi Tractors |
Pak Gulf and Al Ghazi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pak Gulf and Al Ghazi
The main advantage of trading using opposite Pak Gulf and Al Ghazi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pak Gulf position performs unexpectedly, Al Ghazi 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 Al Ghazi will offset losses from the drop in Al Ghazi's long position.| Pak Gulf vs. Sardar Chemical Industries | Pak Gulf vs. Nimir Industrial Chemical | Pak Gulf vs. Sitara Chemical Industries | Pak Gulf vs. Invest Capital Investment |
| Al Ghazi vs. Matco Foods | Al Ghazi vs. Nimir Industrial Chemical | Al Ghazi vs. Habib Insurance | Al Ghazi 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |