Correlation Between Silkbank and Ghandhara Automobile
Can any of the company-specific risk be diversified away by investing in both Silkbank and Ghandhara Automobile 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 Silkbank and Ghandhara Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silkbank and Ghandhara Automobile, you can compare the effects of market volatilities on Silkbank and Ghandhara Automobile 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 Silkbank with a short position of Ghandhara Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silkbank and Ghandhara Automobile.
Diversification Opportunities for Silkbank and Ghandhara Automobile
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Silkbank and Ghandhara is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Silkbank and Ghandhara Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ghandhara Automobile and Silkbank 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 Silkbank are associated (or correlated) with Ghandhara Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ghandhara Automobile has no effect on the direction of Silkbank i.e., Silkbank and Ghandhara Automobile go up and down completely randomly.
Pair Corralation between Silkbank and Ghandhara Automobile
Assuming the 90 days trading horizon Silkbank is expected to generate 23.45 times less return on investment than Ghandhara Automobile. But when comparing it to its historical volatility, Silkbank is 1.24 times less risky than Ghandhara Automobile. It trades about 0.01 of its potential returns per unit of risk. Ghandhara Automobile is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,338 in Ghandhara Automobile on September 4, 2024 and sell it today you would earn a total of 21,695 from holding Ghandhara Automobile or generate 649.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 78.14% |
| Values | Daily Returns |
Silkbank vs. Ghandhara Automobile
Performance |
| Timeline |
| Silkbank |
| Ghandhara Automobile |
Silkbank and Ghandhara Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silkbank and Ghandhara Automobile
The main advantage of trading using opposite Silkbank and Ghandhara Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silkbank position performs unexpectedly, Ghandhara Automobile 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 Ghandhara Automobile will offset losses from the drop in Ghandhara Automobile's long position.| Silkbank vs. Masood Textile Mills | Silkbank vs. Fauji Foods | Silkbank vs. KSB Pumps | Silkbank vs. Mari Petroleum |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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