Correlation Between Shifa International and Hinopak Motors
Can any of the company-specific risk be diversified away by investing in both Shifa International and Hinopak Motors 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 Hinopak Motors 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 Hinopak Motors, you can compare the effects of market volatilities on Shifa International and Hinopak Motors 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 Hinopak Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shifa International and Hinopak Motors.
Diversification Opportunities for Shifa International and Hinopak Motors
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shifa and Hinopak is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shifa International Hospitals and Hinopak Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hinopak Motors 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 Hinopak Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hinopak Motors has no effect on the direction of Shifa International i.e., Shifa International and Hinopak Motors go up and down completely randomly.
Pair Corralation between Shifa International and Hinopak Motors
Assuming the 90 days trading horizon Shifa International Hospitals is expected to generate 1.87 times more return on investment than Hinopak Motors. However, Shifa International is 1.87 times more volatile than Hinopak Motors. It trades about 0.44 of its potential returns per unit of risk. Hinopak Motors is currently generating about 0.13 per unit of risk. If you would invest 12,663 in Shifa International Hospitals on September 3, 2024 and sell it today you would earn a total of 26,914 from holding Shifa International Hospitals or generate 212.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shifa International Hospitals vs. Hinopak Motors
Performance |
| Timeline |
| Shifa International |
| Hinopak Motors |
Shifa International and Hinopak Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shifa International and Hinopak Motors
The main advantage of trading using opposite Shifa International and Hinopak Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shifa International position performs unexpectedly, Hinopak Motors 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 Hinopak Motors will offset losses from the drop in Hinopak Motors' long position.| Shifa International vs. K Electric | Shifa International vs. Engro | Shifa International vs. Lucky Cement | Shifa International vs. Hub Power |
| Hinopak Motors vs. Agritech | Hinopak Motors vs. Ittehad Chemicals | Hinopak Motors vs. Shifa International Hospitals | Hinopak Motors vs. Synthetic Products Enterprises |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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