Correlation Between Roshan Packages and Millat Tractors
Can any of the company-specific risk be diversified away by investing in both Roshan Packages and Millat Tractors 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 Roshan Packages and Millat Tractors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roshan Packages and Millat Tractors, you can compare the effects of market volatilities on Roshan Packages and Millat Tractors 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 Roshan Packages with a short position of Millat Tractors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roshan Packages and Millat Tractors.
Diversification Opportunities for Roshan Packages and Millat Tractors
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Roshan and Millat is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Roshan Packages and Millat Tractors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millat Tractors and Roshan 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 Roshan Packages are associated (or correlated) with Millat Tractors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millat Tractors has no effect on the direction of Roshan Packages i.e., Roshan Packages and Millat Tractors go up and down completely randomly.
Pair Corralation between Roshan Packages and Millat Tractors
Assuming the 90 days trading horizon Roshan Packages is expected to generate 1.53 times more return on investment than Millat Tractors. However, Roshan Packages is 1.53 times more volatile than Millat Tractors. It trades about 0.08 of its potential returns per unit of risk. Millat Tractors is currently generating about 0.09 per unit of risk. If you would invest 1,009 in Roshan Packages on September 12, 2024 and sell it today you would earn a total of 862.00 from holding Roshan Packages or generate 85.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roshan Packages vs. Millat Tractors
Performance |
| Timeline |
| Roshan Packages |
| Millat Tractors |
Roshan Packages and Millat Tractors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roshan Packages and Millat Tractors
The main advantage of trading using opposite Roshan Packages and Millat Tractors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roshan Packages position performs unexpectedly, Millat Tractors 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 Millat Tractors will offset losses from the drop in Millat Tractors' long position.| Roshan Packages vs. Oil and Gas | Roshan Packages vs. Pakistan State Oil | Roshan Packages vs. Pakistan Petroleum | Roshan Packages vs. Fauji Fertilizer |
| Millat Tractors vs. Pakistan Aluminium Beverage | Millat Tractors vs. Premier Insurance | Millat Tractors vs. Roshan Packages | Millat Tractors vs. Reliance Insurance Co |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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