Correlation Between Pakistan Refinery and Ghani Chemical
Can any of the company-specific risk be diversified away by investing in both Pakistan Refinery and Ghani Chemical 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 Refinery and Ghani Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Refinery and Ghani Chemical Industries, you can compare the effects of market volatilities on Pakistan Refinery and Ghani Chemical 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 Refinery with a short position of Ghani Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Refinery and Ghani Chemical.
Diversification Opportunities for Pakistan Refinery and Ghani Chemical
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pakistan and Ghani is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Refinery and Ghani Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ghani Chemical Industries and Pakistan Refinery 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 Refinery are associated (or correlated) with Ghani Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ghani Chemical Industries has no effect on the direction of Pakistan Refinery i.e., Pakistan Refinery and Ghani Chemical go up and down completely randomly.
Pair Corralation between Pakistan Refinery and Ghani Chemical
Assuming the 90 days trading horizon Pakistan Refinery is expected to generate 1.11 times more return on investment than Ghani Chemical. However, Pakistan Refinery is 1.11 times more volatile than Ghani Chemical Industries. It trades about 0.32 of its potential returns per unit of risk. Ghani Chemical Industries is currently generating about 0.16 per unit of risk. If you would invest 2,500 in Pakistan Refinery on September 12, 2024 and sell it today you would earn a total of 826.00 from holding Pakistan Refinery or generate 33.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan Refinery vs. Ghani Chemical Industries
Performance |
| Timeline |
| Pakistan Refinery |
| Ghani Chemical Industries |
Pakistan Refinery and Ghani Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Refinery and Ghani Chemical
The main advantage of trading using opposite Pakistan Refinery and Ghani Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Refinery position performs unexpectedly, Ghani Chemical 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 Ghani Chemical will offset losses from the drop in Ghani Chemical's long position.| Pakistan Refinery vs. Habib Insurance | Pakistan Refinery vs. Ghandhara Automobile | Pakistan Refinery vs. Century Insurance | Pakistan Refinery vs. Reliance Weaving Mills |
| Ghani Chemical vs. Habib Insurance | Ghani Chemical vs. Ghandhara Automobile | Ghani Chemical vs. Century Insurance | Ghani Chemical vs. Reliance Weaving Mills |
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 Stocks Directory module to find actively traded stocks across global markets.
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