Correlation Between Sindh Modaraba and Premier Insurance
Can any of the company-specific risk be diversified away by investing in both Sindh Modaraba and Premier Insurance 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 Sindh Modaraba and Premier Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sindh Modaraba Management and Premier Insurance, you can compare the effects of market volatilities on Sindh Modaraba and Premier Insurance 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 Sindh Modaraba with a short position of Premier Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sindh Modaraba and Premier Insurance.
Diversification Opportunities for Sindh Modaraba and Premier Insurance
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sindh and Premier is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sindh Modaraba Management and Premier Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Insurance and Sindh Modaraba 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 Sindh Modaraba Management are associated (or correlated) with Premier Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Insurance has no effect on the direction of Sindh Modaraba i.e., Sindh Modaraba and Premier Insurance go up and down completely randomly.
Pair Corralation between Sindh Modaraba and Premier Insurance
Assuming the 90 days trading horizon Sindh Modaraba Management is expected to generate 0.61 times more return on investment than Premier Insurance. However, Sindh Modaraba Management is 1.64 times less risky than Premier Insurance. It trades about 0.07 of its potential returns per unit of risk. Premier Insurance is currently generating about 0.03 per unit of risk. If you would invest 540.00 in Sindh Modaraba Management on September 4, 2024 and sell it today you would earn a total of 484.00 from holding Sindh Modaraba Management or generate 89.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 87.11% |
| Values | Daily Returns |
Sindh Modaraba Management vs. Premier Insurance
Performance |
| Timeline |
| Sindh Modaraba Management |
| Premier Insurance |
Sindh Modaraba and Premier Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sindh Modaraba and Premier Insurance
The main advantage of trading using opposite Sindh Modaraba and Premier Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sindh Modaraba position performs unexpectedly, Premier Insurance 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 Premier Insurance will offset losses from the drop in Premier Insurance's long position.| Sindh Modaraba vs. Masood Textile Mills | Sindh Modaraba vs. Fauji Foods | Sindh Modaraba vs. KSB Pumps | Sindh Modaraba vs. Mari Petroleum |
| Premier Insurance vs. Oil and Gas | Premier Insurance vs. Pakistan State Oil | Premier Insurance vs. Pakistan Petroleum | Premier Insurance vs. Fauji Fertilizer |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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