Correlation Between Unity Foods and Khyber Tobacco
Can any of the company-specific risk be diversified away by investing in both Unity Foods 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 Unity Foods and Khyber Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unity Foods and Khyber Tobacco, you can compare the effects of market volatilities on Unity Foods 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 Unity Foods with a short position of Khyber Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unity Foods and Khyber Tobacco.
Diversification Opportunities for Unity Foods and Khyber Tobacco
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Unity and Khyber is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Unity Foods and Khyber Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khyber Tobacco and Unity Foods 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 Unity Foods 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 Unity Foods i.e., Unity Foods and Khyber Tobacco go up and down completely randomly.
Pair Corralation between Unity Foods and Khyber Tobacco
Assuming the 90 days trading horizon Unity Foods is expected to generate 0.4 times more return on investment than Khyber Tobacco. However, Unity Foods is 2.51 times less risky than Khyber Tobacco. It trades about 0.05 of its potential returns per unit of risk. Khyber Tobacco is currently generating about -0.01 per unit of risk. If you would invest 2,353 in Unity Foods on December 2, 2024 and sell it today you would earn a total of 542.00 from holding Unity Foods or generate 23.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 63.22% |
| Values | Daily Returns |
Unity Foods vs. Khyber Tobacco
Performance |
| Timeline |
| Unity Foods |
| Khyber Tobacco |
Unity Foods and Khyber Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unity Foods and Khyber Tobacco
The main advantage of trading using opposite Unity Foods and Khyber Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unity Foods 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.| Unity Foods vs. Habib Insurance | Unity Foods vs. EFU General Insurance | Unity Foods vs. Century Insurance | Unity Foods vs. MCB Bank |
| Khyber Tobacco vs. Pak Datacom | Khyber Tobacco vs. Reliance Insurance Co | Khyber Tobacco vs. Askari General Insurance | Khyber Tobacco vs. Shifa International Hospitals |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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