Correlation Between Sardar Chemical and Gul Ahmed
Can any of the company-specific risk be diversified away by investing in both Sardar Chemical and Gul Ahmed 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 Sardar Chemical and Gul Ahmed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sardar Chemical Industries and Gul Ahmed Textile, you can compare the effects of market volatilities on Sardar Chemical and Gul Ahmed 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 Sardar Chemical with a short position of Gul Ahmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sardar Chemical and Gul Ahmed.
Diversification Opportunities for Sardar Chemical and Gul Ahmed
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sardar and Gul is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sardar Chemical Industries and Gul Ahmed Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gul Ahmed Textile and Sardar Chemical 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 Sardar Chemical Industries are associated (or correlated) with Gul Ahmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gul Ahmed Textile has no effect on the direction of Sardar Chemical i.e., Sardar Chemical and Gul Ahmed go up and down completely randomly.
Pair Corralation between Sardar Chemical and Gul Ahmed
Assuming the 90 days trading horizon Sardar Chemical Industries is expected to generate 4.22 times more return on investment than Gul Ahmed. However, Sardar Chemical is 4.22 times more volatile than Gul Ahmed Textile. It trades about 0.09 of its potential returns per unit of risk. Gul Ahmed Textile is currently generating about -0.26 per unit of risk. If you would invest 3,152 in Sardar Chemical Industries on December 4, 2024 and sell it today you would earn a total of 207.00 from holding Sardar Chemical Industries or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Sardar Chemical Industries vs. Gul Ahmed Textile
Performance |
| Timeline |
| Sardar Chemical Indu |
| Gul Ahmed Textile |
Sardar Chemical and Gul Ahmed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sardar Chemical and Gul Ahmed
The main advantage of trading using opposite Sardar Chemical and Gul Ahmed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sardar Chemical position performs unexpectedly, Gul Ahmed 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 Gul Ahmed will offset losses from the drop in Gul Ahmed's long position.| Sardar Chemical vs. Shifa International Hospitals | Sardar Chemical vs. Faysal Bank | Sardar Chemical vs. Century Insurance | Sardar Chemical vs. IGI Life Insurance |
| Gul Ahmed vs. Pakistan Reinsurance | Gul Ahmed vs. 786 Investment Limited | Gul Ahmed vs. Pakistan Synthetics | Gul Ahmed vs. Unity Foods |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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