Correlation Between Pakistan Synthetics and Ittehad Chemicals
Can any of the company-specific risk be diversified away by investing in both Pakistan Synthetics 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 Pakistan Synthetics and Ittehad Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakistan Synthetics and Ittehad Chemicals, you can compare the effects of market volatilities on Pakistan Synthetics 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 Pakistan Synthetics with a short position of Ittehad Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakistan Synthetics and Ittehad Chemicals.
Diversification Opportunities for Pakistan Synthetics and Ittehad Chemicals
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pakistan and Ittehad is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pakistan Synthetics and Ittehad Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ittehad Chemicals and Pakistan Synthetics 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 Synthetics 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 Pakistan Synthetics i.e., Pakistan Synthetics and Ittehad Chemicals go up and down completely randomly.
Pair Corralation between Pakistan Synthetics and Ittehad Chemicals
Assuming the 90 days trading horizon Pakistan Synthetics is expected to under-perform the Ittehad Chemicals. In addition to that, Pakistan Synthetics is 1.23 times more volatile than Ittehad Chemicals. It trades about -0.02 of its total potential returns per unit of risk. Ittehad Chemicals is currently generating about 0.27 per unit of volatility. If you would invest 4,395 in Ittehad Chemicals on September 2, 2024 and sell it today you would earn a total of 2,368 from holding Ittehad Chemicals or generate 53.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.92% |
| Values | Daily Returns |
Pakistan Synthetics vs. Ittehad Chemicals
Performance |
| Timeline |
| Pakistan Synthetics |
| Ittehad Chemicals |
Pakistan Synthetics and Ittehad Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakistan Synthetics and Ittehad Chemicals
The main advantage of trading using opposite Pakistan Synthetics and Ittehad Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakistan Synthetics 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.| Pakistan Synthetics vs. Masood Textile Mills | Pakistan Synthetics vs. Fauji Foods | Pakistan Synthetics vs. KSB Pumps | Pakistan Synthetics vs. Mari Petroleum |
| Ittehad Chemicals vs. Pakistan Tobacco | Ittehad Chemicals vs. JS Investments | Ittehad Chemicals vs. Agritech | Ittehad Chemicals vs. Lotte Chemical Pakistan |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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