Correlation Between Shifa International and 786 Investment
Can any of the company-specific risk be diversified away by investing in both Shifa International and 786 Investment 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 Shifa International and 786 Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shifa International Hospitals and 786 Investment Limited, you can compare the effects of market volatilities on Shifa International and 786 Investment 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 Shifa International with a short position of 786 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shifa International and 786 Investment.
Diversification Opportunities for Shifa International and 786 Investment
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shifa and 786 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shifa International Hospitals and 786 Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 786 Investment and Shifa International 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 Shifa International Hospitals are associated (or correlated) with 786 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 786 Investment has no effect on the direction of Shifa International i.e., Shifa International and 786 Investment go up and down completely randomly.
Pair Corralation between Shifa International and 786 Investment
Assuming the 90 days trading horizon Shifa International Hospitals is expected to generate 0.96 times more return on investment than 786 Investment. However, Shifa International Hospitals is 1.04 times less risky than 786 Investment. It trades about 0.31 of its potential returns per unit of risk. 786 Investment Limited is currently generating about 0.1 per unit of risk. If you would invest 27,177 in Shifa International Hospitals on August 30, 2024 and sell it today you would earn a total of 10,854 from holding Shifa International Hospitals or generate 39.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shifa International Hospitals vs. 786 Investment Limited
Performance |
| Timeline |
| Shifa International |
| 786 Investment |
Shifa International and 786 Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shifa International and 786 Investment
The main advantage of trading using opposite Shifa International and 786 Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shifa International position performs unexpectedly, 786 Investment 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 786 Investment will offset losses from the drop in 786 Investment's long position.| Shifa International vs. Oil and Gas | Shifa International vs. Pakistan State Oil | Shifa International vs. Pakistan Petroleum | Shifa International vs. Fauji Fertilizer |
| 786 Investment vs. Shifa International Hospitals | 786 Investment vs. TPL Insurance | 786 Investment vs. Escorts Investment Bank | 786 Investment vs. Soneri Bank |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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