Correlation Between Sitara Chemical and Kohinoor Industries
Can any of the company-specific risk be diversified away by investing in both Sitara Chemical and Kohinoor Industries 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 Kohinoor Industries 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 Kohinoor Industries, you can compare the effects of market volatilities on Sitara Chemical and Kohinoor Industries 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 Kohinoor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitara Chemical and Kohinoor Industries.
Diversification Opportunities for Sitara Chemical and Kohinoor Industries
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sitara and Kohinoor is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sitara Chemical Industries and Kohinoor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kohinoor 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 Kohinoor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kohinoor Industries has no effect on the direction of Sitara Chemical i.e., Sitara Chemical and Kohinoor Industries go up and down completely randomly.
Pair Corralation between Sitara Chemical and Kohinoor Industries
Assuming the 90 days trading horizon Sitara Chemical Industries is expected to generate 0.8 times more return on investment than Kohinoor Industries. However, Sitara Chemical Industries is 1.26 times less risky than Kohinoor Industries. It trades about 0.38 of its potential returns per unit of risk. Kohinoor Industries is currently generating about 0.02 per unit of risk. If you would invest 28,496 in Sitara Chemical Industries on October 20, 2024 and sell it today you would earn a total of 4,504 from holding Sitara Chemical Industries or generate 15.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sitara Chemical Industries vs. Kohinoor Industries
Performance |
| Timeline |
| Sitara Chemical Indu |
| Kohinoor Industries |
Sitara Chemical and Kohinoor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitara Chemical and Kohinoor Industries
The main advantage of trading using opposite Sitara Chemical and Kohinoor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitara Chemical position performs unexpectedly, Kohinoor Industries 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 Kohinoor Industries will offset losses from the drop in Kohinoor Industries' long position.| Sitara Chemical vs. Nimir Industrial Chemical | Sitara Chemical vs. Sindh Modaraba Management | Sitara Chemical vs. Ittehad Chemicals | Sitara Chemical vs. Crescent Steel Allied |
| Kohinoor Industries vs. MCB Bank | Kohinoor Industries vs. Pakistan Tobacco | Kohinoor Industries vs. Avanceon | Kohinoor Industries vs. Atlas Insurance |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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