Correlation Between Thatta Cement and Arif Habib
Can any of the company-specific risk be diversified away by investing in both Thatta Cement and Arif Habib 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 Thatta Cement and Arif Habib into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thatta Cement and Arif Habib, you can compare the effects of market volatilities on Thatta Cement and Arif Habib 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 Thatta Cement with a short position of Arif Habib. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thatta Cement and Arif Habib.
Diversification Opportunities for Thatta Cement and Arif Habib
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thatta and Arif is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Thatta Cement and Arif Habib in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arif Habib and Thatta Cement 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 Thatta Cement are associated (or correlated) with Arif Habib. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arif Habib has no effect on the direction of Thatta Cement i.e., Thatta Cement and Arif Habib go up and down completely randomly.
Pair Corralation between Thatta Cement and Arif Habib
Assuming the 90 days trading horizon Thatta Cement is expected to generate 1.31 times more return on investment than Arif Habib. However, Thatta Cement is 1.31 times more volatile than Arif Habib. It trades about 0.27 of its potential returns per unit of risk. Arif Habib is currently generating about 0.23 per unit of risk. If you would invest 10,600 in Thatta Cement on August 30, 2024 and sell it today you would earn a total of 3,778 from holding Thatta Cement or generate 35.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thatta Cement vs. Arif Habib
Performance |
| Timeline |
| Thatta Cement |
| Arif Habib |
Thatta Cement and Arif Habib Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thatta Cement and Arif Habib
The main advantage of trading using opposite Thatta Cement and Arif Habib positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thatta Cement position performs unexpectedly, Arif Habib 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 Arif Habib will offset losses from the drop in Arif Habib's long position.| Thatta Cement vs. Security Investment Bank | Thatta Cement vs. Matco Foods | Thatta Cement vs. Ghandhara Automobile | Thatta Cement vs. Unilever Pakistan Foods |
| Arif Habib vs. Escorts Investment Bank | Arif Habib vs. Shaheen Insurance | Arif Habib vs. Ittehad Chemicals | Arif Habib vs. Askari General 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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