Correlation Between Sitara Chemical and Ghani Chemical
Can any of the company-specific risk be diversified away by investing in both Sitara Chemical and Ghani 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 Sitara Chemical and Ghani Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sitara Chemical Industries and Ghani Chemical Industries, you can compare the effects of market volatilities on Sitara Chemical and Ghani 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 Sitara Chemical with a short position of Ghani Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitara Chemical and Ghani Chemical.
Diversification Opportunities for Sitara Chemical and Ghani Chemical
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sitara and Ghani is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sitara Chemical Industries and Ghani Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ghani Chemical Industries and Sitara Chemical 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 Sitara Chemical Industries are associated (or correlated) with Ghani Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ghani Chemical Industries has no effect on the direction of Sitara Chemical i.e., Sitara Chemical and Ghani Chemical go up and down completely randomly.
Pair Corralation between Sitara Chemical and Ghani Chemical
Assuming the 90 days trading horizon Sitara Chemical is expected to generate 2.78 times less return on investment than Ghani Chemical. But when comparing it to its historical volatility, Sitara Chemical Industries is 1.15 times less risky than Ghani Chemical. It trades about 0.07 of its potential returns per unit of risk. Ghani Chemical Industries is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,887 in Ghani Chemical Industries on November 29, 2024 and sell it today you would earn a total of 267.00 from holding Ghani Chemical Industries or generate 14.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Sitara Chemical Industries vs. Ghani Chemical Industries
Performance |
| Timeline |
| Sitara Chemical Indu |
| Ghani Chemical Industries |
Sitara Chemical and Ghani Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitara Chemical and Ghani Chemical
The main advantage of trading using opposite Sitara Chemical and Ghani Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitara Chemical position performs unexpectedly, Ghani 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 Ghani Chemical will offset losses from the drop in Ghani Chemical's long position.| Sitara Chemical vs. ORIX Leasing Pakistan | Sitara Chemical vs. JS Investments | Sitara Chemical vs. Ittehad Chemicals | Sitara Chemical vs. First Fidelity Leasing |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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