Correlation Between Shell Pakistan and Al Ghazi
Can any of the company-specific risk be diversified away by investing in both Shell Pakistan and Al Ghazi 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 Al Ghazi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shell Pakistan and Al Ghazi Tractors, you can compare the effects of market volatilities on Shell Pakistan and Al Ghazi 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 Al Ghazi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shell Pakistan and Al Ghazi.
Diversification Opportunities for Shell Pakistan and Al Ghazi
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shell and AGTL is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Shell Pakistan and Al Ghazi Tractors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Ghazi Tractors 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 Al Ghazi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Ghazi Tractors has no effect on the direction of Shell Pakistan i.e., Shell Pakistan and Al Ghazi go up and down completely randomly.
Pair Corralation between Shell Pakistan and Al Ghazi
Assuming the 90 days trading horizon Shell Pakistan is expected to generate 2.06 times more return on investment than Al Ghazi. However, Shell Pakistan is 2.06 times more volatile than Al Ghazi Tractors. It trades about 0.05 of its potential returns per unit of risk. Al Ghazi Tractors is currently generating about -0.25 per unit of risk. If you would invest 15,138 in Shell Pakistan on August 27, 2024 and sell it today you would earn a total of 237.00 from holding Shell Pakistan or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shell Pakistan vs. Al Ghazi Tractors
Performance |
| Timeline |
| Shell Pakistan |
| Al Ghazi Tractors |
Shell Pakistan and Al Ghazi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shell Pakistan and Al Ghazi
The main advantage of trading using opposite Shell Pakistan and Al Ghazi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shell Pakistan position performs unexpectedly, Al Ghazi 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 Al Ghazi will offset losses from the drop in Al Ghazi's long position.| Shell Pakistan vs. Al Ghazi Tractors | Shell Pakistan vs. Nestle Pakistan | Shell Pakistan vs. Hinopak Motors | Shell Pakistan vs. Abbott Laboratories Pakistan |
| Al Ghazi vs. Masood Textile Mills | Al Ghazi vs. Fauji Foods | Al Ghazi vs. Mari Petroleum | Al Ghazi vs. Loads |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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