Correlation Between Synthetic Products and Khyber Tobacco
Can any of the company-specific risk be diversified away by investing in both Synthetic Products and Khyber Tobacco 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 Synthetic Products and Khyber Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synthetic Products Enterprises and Khyber Tobacco, you can compare the effects of market volatilities on Synthetic Products and Khyber Tobacco 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 Synthetic Products with a short position of Khyber Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synthetic Products and Khyber Tobacco.
Diversification Opportunities for Synthetic Products and Khyber Tobacco
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Synthetic and Khyber is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Synthetic Products Enterprises and Khyber Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khyber Tobacco and Synthetic Products 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 Synthetic Products Enterprises are associated (or correlated) with Khyber Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khyber Tobacco has no effect on the direction of Synthetic Products i.e., Synthetic Products and Khyber Tobacco go up and down completely randomly.
Pair Corralation between Synthetic Products and Khyber Tobacco
Assuming the 90 days trading horizon Synthetic Products Enterprises is expected to generate 0.64 times more return on investment than Khyber Tobacco. However, Synthetic Products Enterprises is 1.55 times less risky than Khyber Tobacco. It trades about 0.12 of its potential returns per unit of risk. Khyber Tobacco is currently generating about -0.01 per unit of risk. If you would invest 1,081 in Synthetic Products Enterprises on September 12, 2024 and sell it today you would earn a total of 2,659 from holding Synthetic Products Enterprises or generate 245.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 36.36% |
| Values | Daily Returns |
Synthetic Products Enterprises vs. Khyber Tobacco
Performance |
| Timeline |
| Synthetic Products |
| Khyber Tobacco |
Synthetic Products and Khyber Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synthetic Products and Khyber Tobacco
The main advantage of trading using opposite Synthetic Products and Khyber Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synthetic Products position performs unexpectedly, Khyber Tobacco 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 Khyber Tobacco will offset losses from the drop in Khyber Tobacco's long position.| Synthetic Products vs. Unilever Pakistan Foods | Synthetic Products vs. Pakistan Tobacco | Synthetic Products vs. The Organic Meat | Synthetic Products vs. Pakistan Aluminium Beverage |
| Khyber Tobacco vs. Unity Foods | Khyber Tobacco vs. Synthetic Products Enterprises | Khyber Tobacco vs. Sitara Chemical Industries | Khyber Tobacco vs. Amreli Steels |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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