Correlation Between Pakistan State and Aisha Steel
Can any of the company-specific risk be diversified away by investing in both Pakistan State 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 State 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 State Oil and Aisha Steel Mills, you can compare the effects of market volatilities on Pakistan State 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 State with a short position of Aisha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan State and Aisha Steel.
Diversification Opportunities for Pakistan State and Aisha Steel
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pakistan and Aisha is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan State Oil 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 State 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 State Oil 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 State i.e., Pakistan State and Aisha Steel go up and down completely randomly.
Pair Corralation between Pakistan State and Aisha Steel
Assuming the 90 days trading horizon Pakistan State Oil is expected to under-perform the Aisha Steel. But the stock apears to be less risky and, when comparing its historical volatility, Pakistan State Oil is 1.4 times less risky than Aisha Steel. The stock trades about -0.17 of its potential returns per unit of risk. The Aisha Steel Mills is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,113 in Aisha Steel Mills on October 26, 2024 and sell it today you would lose (26.00) from holding Aisha Steel Mills or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakistan State Oil vs. Aisha Steel Mills
Performance |
| Timeline |
| Pakistan State Oil |
| Aisha Steel Mills |
Pakistan State and Aisha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan State and Aisha Steel
The main advantage of trading using opposite Pakistan State and Aisha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan State 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 State vs. Ittehad Chemicals | Pakistan State vs. Avanceon | Pakistan State vs. JS Investments | Pakistan State vs. National Foods |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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