Correlation Between Shifa International and Millat Tractors
Can any of the company-specific risk be diversified away by investing in both Shifa International and Millat Tractors 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 Millat Tractors 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 Millat Tractors, you can compare the effects of market volatilities on Shifa International and Millat Tractors 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 Millat Tractors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shifa International and Millat Tractors.
Diversification Opportunities for Shifa International and Millat Tractors
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shifa and Millat is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Shifa International Hospitals and Millat Tractors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millat Tractors 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 Millat Tractors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millat Tractors has no effect on the direction of Shifa International i.e., Shifa International and Millat Tractors go up and down completely randomly.
Pair Corralation between Shifa International and Millat Tractors
Assuming the 90 days trading horizon Shifa International Hospitals is expected to generate 1.63 times more return on investment than Millat Tractors. However, Shifa International is 1.63 times more volatile than Millat Tractors. It trades about 0.16 of its potential returns per unit of risk. Millat Tractors is currently generating about 0.01 per unit of risk. If you would invest 14,544 in Shifa International Hospitals on September 4, 2024 and sell it today you would earn a total of 25,497 from holding Shifa International Hospitals or generate 175.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.67% |
| Values | Daily Returns |
Shifa International Hospitals vs. Millat Tractors
Performance |
| Timeline |
| Shifa International |
| Millat Tractors |
Shifa International and Millat Tractors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shifa International and Millat Tractors
The main advantage of trading using opposite Shifa International and Millat Tractors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shifa International position performs unexpectedly, Millat Tractors 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 Millat Tractors will offset losses from the drop in Millat Tractors' long position.| Shifa International vs. K Electric | Shifa International vs. Engro | Shifa International vs. Lucky Cement | Shifa International vs. Hub Power |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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