Correlation Between Roshan Packages and ZAHIDJEE Textile
Can any of the company-specific risk be diversified away by investing in both Roshan Packages and ZAHIDJEE Textile 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 ZAHIDJEE Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roshan Packages and ZAHIDJEE Textile Mills, you can compare the effects of market volatilities on Roshan Packages and ZAHIDJEE Textile 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 ZAHIDJEE Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roshan Packages and ZAHIDJEE Textile.
Diversification Opportunities for Roshan Packages and ZAHIDJEE Textile
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Roshan and ZAHIDJEE is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Roshan Packages and ZAHIDJEE Textile Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZAHIDJEE Textile Mills 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 ZAHIDJEE Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZAHIDJEE Textile Mills has no effect on the direction of Roshan Packages i.e., Roshan Packages and ZAHIDJEE Textile go up and down completely randomly.
Pair Corralation between Roshan Packages and ZAHIDJEE Textile
Assuming the 90 days trading horizon Roshan Packages is expected to generate 0.6 times more return on investment than ZAHIDJEE Textile. However, Roshan Packages is 1.66 times less risky than ZAHIDJEE Textile. It trades about 0.06 of its potential returns per unit of risk. ZAHIDJEE Textile Mills is currently generating about 0.04 per unit of risk. If you would invest 889.00 in Roshan Packages on October 25, 2024 and sell it today you would earn a total of 891.00 from holding Roshan Packages or generate 100.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 48.34% |
| Values | Daily Returns |
Roshan Packages vs. ZAHIDJEE Textile Mills
Performance |
| Timeline |
| Roshan Packages |
| ZAHIDJEE Textile Mills |
Roshan Packages and ZAHIDJEE Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roshan Packages and ZAHIDJEE Textile
The main advantage of trading using opposite Roshan Packages and ZAHIDJEE Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roshan Packages position performs unexpectedly, ZAHIDJEE Textile 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 ZAHIDJEE Textile will offset losses from the drop in ZAHIDJEE Textile's long position.| Roshan Packages vs. Shaheen Insurance | Roshan Packages vs. Askari General Insurance | Roshan Packages vs. Pakistan Telecommunication | Roshan Packages vs. 786 Investment Limited |
| ZAHIDJEE Textile vs. Pakistan Telecommunication | ZAHIDJEE Textile vs. Big Bird Foods | ZAHIDJEE Textile vs. Fauji Foods | ZAHIDJEE Textile vs. Beco Steel |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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