Correlation Between Thatta Cement and JS Investments
Can any of the company-specific risk be diversified away by investing in both Thatta Cement and JS Investments 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 JS Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thatta Cement and JS Investments, you can compare the effects of market volatilities on Thatta Cement and JS Investments 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 JS Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thatta Cement and JS Investments.
Diversification Opportunities for Thatta Cement and JS Investments
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thatta and JSIL is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Thatta Cement and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments 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 JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of Thatta Cement i.e., Thatta Cement and JS Investments go up and down completely randomly.
Pair Corralation between Thatta Cement and JS Investments
Assuming the 90 days trading horizon Thatta Cement is expected to generate 1.76 times more return on investment than JS Investments. However, Thatta Cement is 1.76 times more volatile than JS Investments. It trades about 0.25 of its potential returns per unit of risk. JS Investments is currently generating about 0.12 per unit of risk. If you would invest 11,746 in Thatta Cement on August 27, 2024 and sell it today you would earn a total of 3,236 from holding Thatta Cement or generate 27.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thatta Cement vs. JS Investments
Performance |
| Timeline |
| Thatta Cement |
| JS Investments |
Thatta Cement and JS Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thatta Cement and JS Investments
The main advantage of trading using opposite Thatta Cement and JS Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thatta Cement position performs unexpectedly, JS Investments 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 JS Investments will offset losses from the drop in JS Investments' long position.| Thatta Cement vs. Shaheen Insurance | Thatta Cement vs. Pakistan Hotel Developers | Thatta Cement vs. Jubilee Life Insurance | Thatta Cement vs. Hi Tech Lubricants |
| JS Investments vs. Masood Textile Mills | JS Investments vs. Fauji Foods | JS Investments vs. KSB Pumps | JS Investments 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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