Correlation Between Shaheen Insurance and Bestway Cement
Can any of the company-specific risk be diversified away by investing in both Shaheen Insurance and Bestway Cement 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 Shaheen Insurance and Bestway Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shaheen Insurance and Bestway Cement, you can compare the effects of market volatilities on Shaheen Insurance and Bestway Cement 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 Shaheen Insurance with a short position of Bestway Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaheen Insurance and Bestway Cement.
Diversification Opportunities for Shaheen Insurance and Bestway Cement
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shaheen and Bestway is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Shaheen Insurance and Bestway Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bestway Cement and Shaheen Insurance 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 Shaheen Insurance are associated (or correlated) with Bestway Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bestway Cement has no effect on the direction of Shaheen Insurance i.e., Shaheen Insurance and Bestway Cement go up and down completely randomly.
Pair Corralation between Shaheen Insurance and Bestway Cement
Assuming the 90 days trading horizon Shaheen Insurance is expected to generate 1.26 times less return on investment than Bestway Cement. In addition to that, Shaheen Insurance is 2.12 times more volatile than Bestway Cement. It trades about 0.09 of its total potential returns per unit of risk. Bestway Cement is currently generating about 0.24 per unit of volatility. If you would invest 20,500 in Bestway Cement on September 3, 2024 and sell it today you would earn a total of 11,973 from holding Bestway Cement or generate 58.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.41% |
| Values | Daily Returns |
Shaheen Insurance vs. Bestway Cement
Performance |
| Timeline |
| Shaheen Insurance |
| Bestway Cement |
Shaheen Insurance and Bestway Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shaheen Insurance and Bestway Cement
The main advantage of trading using opposite Shaheen Insurance and Bestway Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaheen Insurance position performs unexpectedly, Bestway Cement 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 Bestway Cement will offset losses from the drop in Bestway Cement's long position.| Shaheen Insurance vs. Faysal Bank | Shaheen Insurance vs. Ghani Chemical Industries | Shaheen Insurance vs. Meezan Bank | Shaheen Insurance vs. EFU General Insurance |
| Bestway Cement vs. JS Global Banking | Bestway Cement vs. Agha Steel Industries | Bestway Cement vs. Dost Steels | Bestway Cement vs. Meezan 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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