Correlation Between United Bank and Nimir Industrial
Can any of the company-specific risk be diversified away by investing in both United Bank and Nimir Industrial 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 United Bank and Nimir Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bank and Nimir Industrial Chemical, you can compare the effects of market volatilities on United Bank and Nimir Industrial 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 United Bank with a short position of Nimir Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bank and Nimir Industrial.
Diversification Opportunities for United Bank and Nimir Industrial
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Nimir is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding United Bank and Nimir Industrial Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nimir Industrial Chemical and United Bank 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 United Bank are associated (or correlated) with Nimir Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nimir Industrial Chemical has no effect on the direction of United Bank i.e., United Bank and Nimir Industrial go up and down completely randomly.
Pair Corralation between United Bank and Nimir Industrial
Assuming the 90 days trading horizon United Bank is expected to generate 0.57 times more return on investment than Nimir Industrial. However, United Bank is 1.75 times less risky than Nimir Industrial. It trades about 0.2 of its potential returns per unit of risk. Nimir Industrial Chemical is currently generating about 0.06 per unit of risk. If you would invest 6,681 in United Bank on September 4, 2024 and sell it today you would earn a total of 27,556 from holding United Bank or generate 412.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.22% |
| Values | Daily Returns |
United Bank vs. Nimir Industrial Chemical
Performance |
| Timeline |
| United Bank |
| Nimir Industrial Chemical |
United Bank and Nimir Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bank and Nimir Industrial
The main advantage of trading using opposite United Bank and Nimir Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bank position performs unexpectedly, Nimir Industrial 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 Nimir Industrial will offset losses from the drop in Nimir Industrial's long position.| United Bank vs. Atlas Insurance | United Bank vs. Beco Steel | United Bank vs. Askari Bank | United Bank vs. Century Insurance |
| Nimir Industrial vs. Masood Textile Mills | Nimir Industrial vs. Fauji Foods | Nimir Industrial vs. KSB Pumps | Nimir Industrial 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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