Correlation Between Packages and Ittehad Chemicals
Can any of the company-specific risk be diversified away by investing in both Packages and Ittehad Chemicals 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 Packages and Ittehad Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Packages and Ittehad Chemicals, you can compare the effects of market volatilities on Packages and Ittehad Chemicals 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 Packages with a short position of Ittehad Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Packages and Ittehad Chemicals.
Diversification Opportunities for Packages and Ittehad Chemicals
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Packages and Ittehad is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Packages and Ittehad Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ittehad Chemicals and Packages 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 Packages are associated (or correlated) with Ittehad Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ittehad Chemicals has no effect on the direction of Packages i.e., Packages and Ittehad Chemicals go up and down completely randomly.
Pair Corralation between Packages and Ittehad Chemicals
Assuming the 90 days trading horizon Packages is expected to under-perform the Ittehad Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, Packages is 1.35 times less risky than Ittehad Chemicals. The stock trades about -0.15 of its potential returns per unit of risk. The Ittehad Chemicals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 6,857 in Ittehad Chemicals on October 26, 2024 and sell it today you would earn a total of 472.00 from holding Ittehad Chemicals or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Packages vs. Ittehad Chemicals
Performance |
| Timeline |
| Packages |
| Ittehad Chemicals |
Packages and Ittehad Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Packages and Ittehad Chemicals
The main advantage of trading using opposite Packages and Ittehad Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Packages position performs unexpectedly, Ittehad Chemicals 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 Ittehad Chemicals will offset losses from the drop in Ittehad Chemicals' long position.| Packages vs. IGI Life Insurance | Packages vs. EFU General Insurance | Packages vs. Ghandhara Automobile | Packages vs. TPL Insurance |
| Ittehad Chemicals vs. JS Investments | Ittehad Chemicals vs. Packages | Ittehad Chemicals vs. Ghandhara Automobile | Ittehad Chemicals vs. Bawany Air Products |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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