Correlation Between Security Investment and National Refinery
Can any of the company-specific risk be diversified away by investing in both Security Investment and National Refinery 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 Security Investment and National Refinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Security Investment Bank and National Refinery, you can compare the effects of market volatilities on Security Investment and National Refinery 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 Security Investment with a short position of National Refinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security Investment and National Refinery.
Diversification Opportunities for Security Investment and National Refinery
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Security and National is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Security Investment Bank and National Refinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Refinery and Security Investment 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 Security Investment Bank are associated (or correlated) with National Refinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Refinery has no effect on the direction of Security Investment i.e., Security Investment and National Refinery go up and down completely randomly.
Pair Corralation between Security Investment and National Refinery
Assuming the 90 days trading horizon Security Investment Bank is expected to generate 2.07 times more return on investment than National Refinery. However, Security Investment is 2.07 times more volatile than National Refinery. It trades about 0.04 of its potential returns per unit of risk. National Refinery is currently generating about -0.04 per unit of risk. If you would invest 455.00 in Security Investment Bank on September 3, 2024 and sell it today you would earn a total of 51.00 from holding Security Investment Bank or generate 11.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 76.67% |
| Values | Daily Returns |
Security Investment Bank vs. National Refinery
Performance |
| Timeline |
| Security Investment Bank |
| National Refinery |
Security Investment and National Refinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Security Investment and National Refinery
The main advantage of trading using opposite Security Investment and National Refinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Security Investment position performs unexpectedly, National Refinery 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 National Refinery will offset losses from the drop in National Refinery's long position.| Security Investment vs. Masood Textile Mills | Security Investment vs. Fauji Foods | Security Investment vs. KSB Pumps | Security Investment vs. Mari Petroleum |
| National Refinery vs. Big Bird Foods | National Refinery vs. Ittehad Chemicals | National Refinery vs. IBL HealthCare | National Refinery vs. Amreli Steels |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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