Correlation Between Silkbank and Leather Up
Can any of the company-specific risk be diversified away by investing in both Silkbank and Leather Up 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 Leather Up into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silkbank and Leather Up, you can compare the effects of market volatilities on Silkbank and Leather Up 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 Leather Up. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silkbank and Leather Up.
Diversification Opportunities for Silkbank and Leather Up
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Silkbank and Leather is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Silkbank and Leather Up in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leather Up 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 Leather Up. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leather Up has no effect on the direction of Silkbank i.e., Silkbank and Leather Up go up and down completely randomly.
Pair Corralation between Silkbank and Leather Up
Assuming the 90 days trading horizon Silkbank is expected to generate 8.57 times less return on investment than Leather Up. But when comparing it to its historical volatility, Silkbank is 1.7 times less risky than Leather Up. It trades about 0.02 of its potential returns per unit of risk. Leather Up is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,464 in Leather Up on September 3, 2024 and sell it today you would earn a total of 400.00 from holding Leather Up or generate 27.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 85.94% |
| Values | Daily Returns |
Silkbank vs. Leather Up
Performance |
| Timeline |
| Silkbank |
| Leather Up |
Silkbank and Leather Up Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silkbank and Leather Up
The main advantage of trading using opposite Silkbank and Leather Up positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silkbank position performs unexpectedly, Leather Up 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 Leather Up will offset losses from the drop in Leather Up's long position.| Silkbank vs. Masood Textile Mills | Silkbank vs. Fauji Foods | Silkbank vs. KSB Pumps | Silkbank vs. Mari Petroleum |
| Leather Up vs. EFU General Insurance | Leather Up vs. Silkbank | Leather Up vs. Meezan Bank | Leather Up vs. Beco Steel |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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