Correlation Between Shell Pakistan and Agritech
Can any of the company-specific risk be diversified away by investing in both Shell Pakistan and Agritech 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 Shell Pakistan and Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shell Pakistan and Agritech, you can compare the effects of market volatilities on Shell Pakistan and Agritech 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 Shell Pakistan with a short position of Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shell Pakistan and Agritech.
Diversification Opportunities for Shell Pakistan and Agritech
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shell and Agritech is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Shell Pakistan and Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agritech and Shell Pakistan 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 Shell Pakistan are associated (or correlated) with Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agritech has no effect on the direction of Shell Pakistan i.e., Shell Pakistan and Agritech go up and down completely randomly.
Pair Corralation between Shell Pakistan and Agritech
Assuming the 90 days trading horizon Shell Pakistan is expected to generate 0.98 times more return on investment than Agritech. However, Shell Pakistan is 1.02 times less risky than Agritech. It trades about 0.39 of its potential returns per unit of risk. Agritech is currently generating about 0.01 per unit of risk. If you would invest 14,195 in Shell Pakistan on September 1, 2024 and sell it today you would earn a total of 2,375 from holding Shell Pakistan or generate 16.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Shell Pakistan vs. Agritech
Performance |
| Timeline |
| Shell Pakistan |
| Agritech |
Shell Pakistan and Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shell Pakistan and Agritech
The main advantage of trading using opposite Shell Pakistan and Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shell Pakistan position performs unexpectedly, Agritech 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 Agritech will offset losses from the drop in Agritech's long position.| Shell Pakistan vs. National Bank of | Shell Pakistan vs. United Bank | Shell Pakistan vs. Bank Alfalah | Shell Pakistan vs. Allied Bank |
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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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