Correlation Between Sitara Chemical and K Electric
Can any of the company-specific risk be diversified away by investing in both Sitara Chemical and K Electric 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 K Electric 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 K Electric, you can compare the effects of market volatilities on Sitara Chemical and K Electric 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 K Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitara Chemical and K Electric.
Diversification Opportunities for Sitara Chemical and K Electric
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sitara and KEL is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sitara Chemical Industries and K Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Electric 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 K Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Electric has no effect on the direction of Sitara Chemical i.e., Sitara Chemical and K Electric go up and down completely randomly.
Pair Corralation between Sitara Chemical and K Electric
Assuming the 90 days trading horizon Sitara Chemical Industries is expected to generate 0.84 times more return on investment than K Electric. However, Sitara Chemical Industries is 1.18 times less risky than K Electric. It trades about 0.04 of its potential returns per unit of risk. K Electric is currently generating about -0.04 per unit of risk. If you would invest 31,511 in Sitara Chemical Industries on December 1, 2024 and sell it today you would earn a total of 489.00 from holding Sitara Chemical Industries or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Sitara Chemical Industries vs. K Electric
Performance |
| Timeline |
| Sitara Chemical Indu |
| K Electric |
Sitara Chemical and K Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitara Chemical and K Electric
The main advantage of trading using opposite Sitara Chemical and K Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitara Chemical position performs unexpectedly, K Electric 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 K Electric will offset losses from the drop in K Electric's long position.| Sitara Chemical vs. Honda Atlas Cars | Sitara Chemical vs. Sardar Chemical Industries | Sitara Chemical vs. Askari General Insurance | Sitara Chemical vs. Crescent Star Insurance |
| K Electric vs. Agha Steel Industries | K Electric vs. Pakistan Synthetics | K Electric vs. WorldCall Telecom | K Electric vs. Arpak International Investment |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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