Correlation Between Silkbank and Sardar Chemical
Can any of the company-specific risk be diversified away by investing in both Silkbank and Sardar Chemical 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 Sardar Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silkbank and Sardar Chemical Industries, you can compare the effects of market volatilities on Silkbank and Sardar Chemical 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 Sardar Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silkbank and Sardar Chemical.
Diversification Opportunities for Silkbank and Sardar Chemical
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Silkbank and Sardar is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Silkbank and Sardar Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sardar Chemical Indu 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 Sardar Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sardar Chemical Indu has no effect on the direction of Silkbank i.e., Silkbank and Sardar Chemical go up and down completely randomly.
Pair Corralation between Silkbank and Sardar Chemical
Assuming the 90 days trading horizon Silkbank is expected to generate 1.18 times more return on investment than Sardar Chemical. However, Silkbank is 1.18 times more volatile than Sardar Chemical Industries. It trades about -0.02 of its potential returns per unit of risk. Sardar Chemical Industries is currently generating about -0.26 per unit of risk. If you would invest 102.00 in Silkbank on October 25, 2024 and sell it today you would lose (2.00) from holding Silkbank or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.0% |
| Values | Daily Returns |
Silkbank vs. Sardar Chemical Industries
Performance |
| Timeline |
| Silkbank |
| Sardar Chemical Indu |
Silkbank and Sardar Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silkbank and Sardar Chemical
The main advantage of trading using opposite Silkbank and Sardar Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silkbank position performs unexpectedly, Sardar Chemical 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 Sardar Chemical will offset losses from the drop in Sardar Chemical's long position.| Silkbank vs. NetSol Technologies | Silkbank vs. Pakistan Aluminium Beverage | Silkbank vs. Big Bird Foods | Silkbank vs. Matco Foods |
| Sardar Chemical vs. Soneri Bank | Sardar Chemical vs. Pakistan Reinsurance | Sardar Chemical vs. Jubilee Life Insurance | Sardar Chemical vs. Silkbank |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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