Correlation Between Thatta Cement and First Credit
Can any of the company-specific risk be diversified away by investing in both Thatta Cement and First Credit 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 First Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thatta Cement and First Credit And, you can compare the effects of market volatilities on Thatta Cement and First Credit 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 First Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thatta Cement and First Credit.
Diversification Opportunities for Thatta Cement and First Credit
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thatta and First is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Thatta Cement and First Credit And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Credit And 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 First Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Credit And has no effect on the direction of Thatta Cement i.e., Thatta Cement and First Credit go up and down completely randomly.
Pair Corralation between Thatta Cement and First Credit
Assuming the 90 days trading horizon Thatta Cement is expected to generate 1.34 times more return on investment than First Credit. However, Thatta Cement is 1.34 times more volatile than First Credit And. It trades about 0.46 of its potential returns per unit of risk. First Credit And is currently generating about 0.04 per unit of risk. If you would invest 10,735 in Thatta Cement on September 13, 2024 and sell it today you would earn a total of 9,598 from holding Thatta Cement or generate 89.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Thatta Cement vs. First Credit And
Performance |
| Timeline |
| Thatta Cement |
| First Credit And |
Thatta Cement and First Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thatta Cement and First Credit
The main advantage of trading using opposite Thatta Cement and First Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thatta Cement position performs unexpectedly, First Credit 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 First Credit will offset losses from the drop in First Credit's long position.| Thatta Cement vs. Oil and Gas | Thatta Cement vs. Pakistan State Oil | Thatta Cement vs. Pakistan Petroleum | Thatta Cement vs. Fauji Fertilizer |
| First Credit vs. Masood Textile Mills | First Credit vs. Fauji Foods | First Credit vs. KSB Pumps | First Credit 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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