Correlation Between Sitara Chemical and Pakistan Synthetics
Can any of the company-specific risk be diversified away by investing in both Sitara Chemical and Pakistan Synthetics 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 Pakistan Synthetics 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 Pakistan Synthetics, you can compare the effects of market volatilities on Sitara Chemical and Pakistan Synthetics 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 Pakistan Synthetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitara Chemical and Pakistan Synthetics.
Diversification Opportunities for Sitara Chemical and Pakistan Synthetics
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sitara and Pakistan is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sitara Chemical Industries and Pakistan Synthetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Synthetics 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 Pakistan Synthetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Synthetics has no effect on the direction of Sitara Chemical i.e., Sitara Chemical and Pakistan Synthetics go up and down completely randomly.
Pair Corralation between Sitara Chemical and Pakistan Synthetics
Assuming the 90 days trading horizon Sitara Chemical Industries is expected to generate 0.67 times more return on investment than Pakistan Synthetics. However, Sitara Chemical Industries is 1.48 times less risky than Pakistan Synthetics. It trades about 0.04 of its potential returns per unit of risk. Pakistan Synthetics is currently generating about 0.03 per unit of risk. If you would invest 22,208 in Sitara Chemical Industries on August 29, 2024 and sell it today you would earn a total of 5,992 from holding Sitara Chemical Industries or generate 26.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 89.67% |
| Values | Daily Returns |
Sitara Chemical Industries vs. Pakistan Synthetics
Performance |
| Timeline |
| Sitara Chemical Indu |
| Pakistan Synthetics |
Sitara Chemical and Pakistan Synthetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitara Chemical and Pakistan Synthetics
The main advantage of trading using opposite Sitara Chemical and Pakistan Synthetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitara Chemical position performs unexpectedly, Pakistan Synthetics 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 Pakistan Synthetics will offset losses from the drop in Pakistan Synthetics' long position.| Sitara Chemical vs. Masood Textile Mills | Sitara Chemical vs. Fauji Foods | Sitara Chemical vs. KSB Pumps | Sitara Chemical vs. Mari Petroleum |
| Pakistan Synthetics vs. Masood Textile Mills | Pakistan Synthetics vs. Fauji Foods | Pakistan Synthetics vs. KSB Pumps | Pakistan Synthetics vs. Mari Petroleum |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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